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As financial institutions, banks have fundamental obligations to their customers, some of which shall be considered in this article. They play an essential role in the economy, and their actions can have a weighty impact on the lives of individuals, businesses, and the country as a whole. The relationship between a bank and its customer is mainly contractual in nature; the contract primarily appears in the form of a debtor-creditor relationship. However, it must be noted that the bank-customer relationship may also appear in other forms depending on the circumstances of the transaction. In Nigeria, banks have several responsibilities to their customers, ranging from ensuring security to providing excellent customer service. In this article, we will discuss the prime responsibilities of banks to their customers in Nigeria.
HONOURING CHEQUES
The most prominent duty owed by the bank to its customer is the duty to honor a customer’s request for his money, as long as the money the bank holds for such a customer is sufficient enough to satisfy the customer’s request. This duty exists because of the debtor-creditor relationship between the bank and the customer. A customer is entitled to compensation when the bank fails in this duty. In JIGNA FARMS LTD V. UBN PLC (2016) LPELR-40231(CA) the Court further concretized the laid down principle saying: The relationship between a bank and its customer is contractual in nature. It is that of a debtor and creditor or principal and agent. A bank is therefore under a duty to honor cheques drawn on it by a customer who has sufficient funds with the bank to cover the amount endorsed on the cheque. Failure to do so constitutes a breach of contract for which the bank will be liable for damages
PROTECTING CUSTOMER DEPOSITS
When a customer deposits money with the bank, the money is either seen as a loan or entrusted to the bank which invariably places an important responsibility on the bank to protect the customer’s deposit. Nigerian banks are obligated by law to be members of the Nigeria Deposit Insurance Corporation (NDIC), which provides deposit insurance to customers of insured banks in the event of a bank failure. This insurance ensures that customers can recover their deposits.
PROVIDING ACCESS TO FINANCIAL SERVICES
For ease of banking and providing better service to customers, banks in Nigeria have a responsibility to ensure that all customers have access to financial services irrespective of who they are. This includes offering a wide range of products and services tailored for different customers, regardless of their income level or financial situation. It is important to state that Nigerian banks have made significant strides in expanding access to financial services. The evolution has led to the coming on stream of mobile banking, online banking, and agent banking just to mention a few.
PROVIDING ACCOUNT STATEMENT
An account statement is believed to be the true state of a customer’s standing with the bank. A bank has the responsibility to provide account statements to its customer whether on a regular basis or upon request. This enables the customer to have the perfect trail of various transactions made on the said account. If there are discrepancies concerning transactions on a customer’s account, the account statement can be a reference point for settlement or complaint where necessary.
PROVIDING ADEQUATE INFORMATION
A bank is duty-bound to provide relevant and satisfactory information to its customer as regards the customer’s account and services rendered. This ranges from giving notice where there is a suspected move on the customer’s account (unauthorized access to or on the customer’s account) to giving requisite notice before closing a customer’s account as well as provision of accurate and timely information about their products and services (fees, interest rates, terms and banks’ conditions, and any other relevant detail that customers need to make informed decisions). Nigerian banks are required to disclose all charges associated with their products and services upfront. According to Section 114 of the Nigerian Federal Competition and Consumer Protection Act 2018, this must be in the language the customer understands
PROTECTING CUSTOMER CONFIDENTIALITY
This is also referred to as a duty of confidentiality and secrecy or non-disclosure. Banks have a responsibility to protect their customers’ privacy and keep their personal and financial information private. Nigerian banks are required by law to comply with data protection regulations and maintain the confidentiality of their customers’ information. Customers should be confident that their personal and financial information is secured when they transact with their banks. A breach of the duty of confidentiality through wrongful disclosure of information could result in a breach of contract which is actionable in law. It must however be noted that this duty/responsibility is with limitations. This ranges from legal compulsion (court order) to where it poses a danger to the public or society or in the event of fraud. This means the bank can disclose a customer’s information when faced with the aforementioned situations.
PROVIDING ADMIRABLE CUSTOMER SERVICE
Finally, banks in Nigeria have a responsibility to provide excellent customer service. It deals with the application of reasonable care and skill in the course of its transactions with the customer. Banks are expected to treat their customers with respect and courtesy, respond promptly to inquiries and complaints, swift actions when a customer’s account is under attack, and resolve issues quickly and efficiently.
In conclusion, though the responsibilities highlighted in this article are not exhaustive, Nigerian banks must however be held accountable for living up to these responsibilities, and customers should be empowered to demand quality service from their banks and hold banks accountable in the event of default.
Written by Ajibola Olaosebikan for The Trusted Advisors
Email us: info@trustedadvisorslaw.com