The number of complaints against financial institutions in the country surged by 467 percent in 2015 to hit 255 from only 45 in 2014, the Reserve Bank of Malawi (RBM) has reported.
In its Financial Institutions Supervision Annual Report for 2015, RBM says most of the complaints were from the microfinance, insurance and banking sectors.
It says major causes remained poor customer care and financial abuse by financial service providers.
RBM said financial abuse took the form of delayed settlement of insurance claims, continued deduction on fully repaid loans, making deductions before disbursement of loans by microfinance institutions, and delayed refund on failed automated teller machines (ATM) transactions by banking institutions.
The central bank says of the 255 complaints, 79.6 percent were successfully resolved.
“As at December 31, 2015, 27 complaints were still under investigation while 25 complaints were referred back to complainants as the cases were either before the courts or the complainant did not follow correct procedures,” reads the report in part.
On market conduct, RBM says mystery surveillances and market conduct examinations of financial institutions in 2015 indicated improvement in customer service.
“However, there were lapses in disclosure of product features, terms and conditions to customers which led to customers making uninformed choices. The Registrar made recommendations to the concerned financial institutions to address the shortfalls.
“Further, the Registrar was developing mandatory product disclosure requirements for all financial institutions,” RBM says.
Insurance Association of Malawi President, Grant Mwenechanya, said while the trend is worrying it is up to individual insurance companies to ensure that they have mechanisms that will comply with the dictates of RBM.
Mwenechanya said insurance companies are aware of the rules and regulations set by the central bank.
“The Insurance Association is not there to police the industry. That is the role of the regulator, RBM. If we start doing that, then we will be playing the role of RBM. But it is our hope that our members will observe the rules of the game as stipulated by the Reserve Bank to avoid paying penalties,” Mwenechanya said.
Institute of Bankers Malawi Executive Director, Lyness Nkungula, was yet to respond to our questions when we went to press.
But recently, Consumers Association of Malawi Executive Director, John Kapito, recently accused financial institutions of hiding behind ‘terms and conditions’ to victimize borrowers.
Kapito said the lenders need to stipulate clearly all their conditions so that borrowers are not caught unawareness when dealing with them.