The number of financial complaints received by the Registrar of Financial Institutions significantly jumped by 62 percent in 2023, the latest Reserve Bank of Malawi (RBM) annual report has shown.
The annual report, published last week, shows that the complaints increased from 432 in 2022 to 700 in 2023.
It says, in terms of composition, the pension sector registered the highest number of complaints at 380 while the insurance sector registered 124 complaints.
It further notes that microfinance and financial cooperatives, and the banking sectors had 104 and 87 complaints, respectively. Mobile network operators (MNOs) recorded four complaints while capital markets registered a single complaint.
“Out of the 380 complaints received in the pension sector, 200 related to non-remittance of pension contributions, while 60 were due to employers refusing to facilitate payment of pension benefits.
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“A total of 51 complaints emanated from non-placement of employees on pension schemes by employers. There were 29 applications for discretionary approvals to access all pension benefits as opposed to mode of payments stipulated in the Pension Act, 2023.
“The rest of the complaints (40) included late payment of benefits by administrators, challenges in accessing death benefits and delays in transferring pension requests,” RBM says.
It adds that the most prevalent complaints in the insurance sector related to delayed settlement of claims and disputing surrender values of policies.
The RBM annual report further says complaints in the microfinance sector were mostly due to delayed resolution of customer complaints, denied or delayed processing of settlement letters and loan statements as well as erroneous loan deductions.
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Registrar of Financial Institutions Wilson Banda said the surge in financial consumer complaints prompted his office to step up initiatives to enhance consumer awareness and combat money laundering.
Banda said the financial sector legal framework was also strengthened through new laws and regulations, including through enactment of the Deposit Insurance Corporation Bill and Pension Bill.
Consumers Association of Malawi (Cama) Executive Director John Kapito said the rise in financial complaints has really worsened and much of it is a result of mushrooming consumer products and platforms that financial institutions have introduced but have failed to invest to ensure that they are user friendly.
According to Kapito, financial inclusion has had its challenges.
“Unfortunately, the financial institutions have failed to take advantage of this boost because they are the only institutions making huge profits with no competition and they don’t bother and care about customer service.
“One other challenge is the lack of a financial supervisory body for financial institutions. The central bank, which is supposed to play the role of an Ombudsman, has found itself embroiled in the defence of financial institutions,” Kapito said.
