By Kingsley Jassi:
A recent directive by the Reserve Bank of Malawi (RBM) has put banks and other financial service providers in the spotlight in their handling of customer complaints, setting standard procedures and penalties.
The central bank has prescribed penalties of up to K50 million for financial institutions that contravene the laid down procedures and standards in their handling of customer complaints.
This comes amid concerns on lack of guidelines that standardise processes of dispute resolutions between customers and financial service providers.
In the directive, the central bank has provided a maximum of two and 30 days during which the financial institutions should conclude and resolve complaints, depending on the complexity of the cases.
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The directive has also prohibited the financial service providers from imposing any fee on the service a customer requires in a complaint, a move that relieves customers in the banking industry, who were made to pay for CCTV access and bank statements in the event they needed to trace transactions under dispute.
“Where a financial institution contravenes or fails to comply with any provision of this directive, the institution and any member of the board or management of the institution shall be liable to a monetary penalty; in the case of the financial institution, of up to K50,000,000; and (b) in the case of the member of the board or management, of up to K10,000,000,” the directive reads.
Consumers Association of Malawi Executive Director John Kapito has since expressed dissatisfaction with the 30-day maximum period given to the financial institutions, saying this disadvantages the customer who may incur losses during the period.
“I am not aware of the nature of complaints that are being referred to and I am not sure that resolving a failed transaction should take 30 days to conclude,” Kapito said.
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While admitting he needed to fully understand the contents of the directive and come up with a comprehensive response, Kapito said he was not sure how the directive would improve things for customers.
Some complaints that are rampant in financial service delivery include failed payment transactions, missing funds in bank accounts, late insurance payouts, among others.
There was no response from the Bankers Association of Malawi, the financial sector’s umbrella body.
At a recent conference on digital financial services, service glitches on digital payment systems were blamed on lack of standards, and failure by banks and Mobile network operators to adopt a model that was developed by Natswitch to address liquidity issues, leading to frequent transaction failures.
However, RBM Deputy Governor William Matambo then said failed transactions represented just less than one percent of total transactions, although he acknowledged the devastating impact on customers, hence the need to address them.
