In a bid to ensure fairness and transparency in debt collection processes, the Central Bank of Nigeria (CBN) has instructed regulated entities to furnish customers with advance notices of outstanding obligations before initiating any debt recovery activities.
This directive, outlined in the “Revised Consumer Protection Regulations” released on Thursday, underscores the CBN’s commitment to upholding consumer rights and fostering a more equitable financial landscape.
The regulations, aimed at promoting consumer protection principles, delineate clear guidelines for financial institutions to follow. One key provision is that foreclosure measures should only be considered as a last resort after exhausting all other feasible options for loan recovery.
This legal process, whereby ownership shifts to the lender in case of loan default, must be preceded by offering customers the opportunity for a private sale, typically within a 30-day period, unless expressly waived by the customer.
Moreover, the CBN mandates that financial service providers utilize the proceeds from foreclosures to offset the loan balance, while also ensuring transparency by providing customers with detailed reports on collateral sales, including expenses and net proceeds. The responsibility of debt collection agents is also underscored, with banks held accountable for their actions.
In addition to debt collection procedures, the regulations outline stringent restrictions on loan providers’ communication with individuals related to customers, barring them from seeking information beyond what is necessary for loan servicing, except with explicit consent or in cases where individuals have guaranteed the loan.
Furthermore, the CBN underscores the importance of safeguarding consumer assets and mitigating risks associated with digital financial services. It mandates banks to implement robust authentication measures, educate customers on fraud prevention, and provide user-friendly interfaces to minimize errors and enhance security.
Regarding data protection, the regulations emphasize obtaining written consent from consumers for data collection and processing, along with clear options for opting in or out of data sharing. Banks are also prohibited from sharing consumer data with third parties without explicit consent, ensuring consumer privacy and confidentiality.
