New rules for bank­ing sec­tor

Lesotho Times - - Business - Billy Ntaote

BANKS are now re­quired by law to dis­close charges and in­ter­est rates to their clients and the pub­lic to en­able cus­tomers to make in­formed de­ci­sions.

Ac­cord­ing to le­gal notice No. 41 of 2016 tabled on Mon­day in the Na­tional As­sem­bly by Fi­nance Dr ‘Mam­phono Khaketla, banks must dis­close the in­for­ma­tion to en­hance the pub­lic’s con­fi­dence in the financial sys­tem.

The Financial In­sti­tu­tions (Dis­clo­sure of Bank Charges and In­ter­est Rates) Reg­u­la­tions (2016) were part of a gov­ern­ment gazette which also spells out new liq­uid­ity re­quire­ments (le­gal notice No. 40) and per­mis­si­ble bank­ing ac­tiv­i­ties (le­gal notice No. 42) for financial in­sti­tu­tions among other rules. Cen­tral Bank of Le­sotho Gov­er­nor, Dr Retšelisit­soe Mat­lanyane, en­acted the reg­u­la­tions in her ca­pac­ity as Le­sotho’s Financial In­sti­tu­tions Com­mis­sioner.

Un­der the reg­u­la­tions, banks are ob­li­gated to re­veal to cus­tomers and the pub­lic the charges ap­pli­ca­ble to ac­counts through a writ­ten state­ment which should be dis­played and made avail­able at a branch, point of ser­vice and on the bank’s web­site.

The reg­u­la­tions also be­stow in the Com­mis­sioner the power to set the min­i­mum cri­te­ria for the dis­play of the bank and in­ter­est rates.

“Where a bank in­creases or in­tro­duces a new charge ap­pli­ca­ble to an ac­count, the bank shall dis­close the in­crease or new charge, as the case may be, to each cus­tomer in whosese name such an ac­count is kept,” reads part of the le­gal notice.

How­ever, the reg­u­la­tions did not ap­ply to a cus­tomer who would have au­tho­rised thehe bank in writ­ing to charge an amount oth­erer than the amount re­quired to be dis­closed.

“Notwith­stand­ing th­ese reg­u­la­tions, a bank shall ex­plain to a cus­tomer and the he pub­lic the charges re­lated to prod­ucts andnd ser­vices pro­vided by it in a lan­guage that the he cus­tomer and the pub­lic un­der­stand,” the lee­gal notice states.

Banks are also re­quired to dis­close all thehe charges ap­pli­ca­ble to their var­i­ous prod­uct­sts and ser­vices. The reg­u­la­tions pro­hibit fi­nan- cial in­sti­tu­tions from charging for car­ry­ing out in­ves­ti­ga­tions into their cus­tomers’ ac­counts with­out the lat­ter’s ap­proval.

With re­spect to in­ter­est charges, the reg­u­la­tions stip­u­late that banks should dis­close to cus­tomers and the pub­lic the rate of in­ter­est ap­pli­ca­ble to an ac­count by a gen­eral notice dis­played at a branch, point of ser­vice and on the bank’s web­site.

The gen­eral notice, says the reg­u­la­tions, should in­clude the an­nual rate of in­ter­est, the fre­quency of pay­ment of in­ter­est, the man­ner, if any, in which the bal­ance in the de­posit ac­count af­fects the rate of in­ter­est and any other cir­cum­stances that af­fect the rate of in­ter­ests.

“Where a cus­tomer opens an ac­count by phone, the bank shall, not later than seven busi­ness days af­ter the ac­count is opened, pro­vide to the cus­tomer with a writ­ten state­ment which sets out the rate of in­ter­est ap­pli­ca­ble to the ac­count and how the amount of in­ter­est to be paid is to be cal­cu­lated.”

In the event of a change in the rate of in­ter­est, or in the man­ner of cal­cu­lat­ing the amount of in­ter­est ap­pli­ca­ble to a de­posit or credit ac­count, the bank is also ob­li­gated to dis­close the changes.

This should be done through “a writ­ten state­ment de­liv­ered to the per­son in whose name the ac­count is main­tained; a writ­ten state­ment of copies of which are avail­able in each branch of the bank where de­posit ac­counts are kept; or a gen­eral notice that is dis­played in each of the bank’s branches, at each of the bank’s points of ser­vice and on the bank’s web­sites”.

When ad­ver­tis­ing their prod­ucts and ser­vices, banks are now ob­li­gated to dis­close how the amount of in­ter­est ap­pli­ca­ble to each de­posit and credit obli­ga­tion is to be cal­cu­lated through a state­ment in the ad­ver­tise­ment. The state­ment should dis­close: “In re­spect of in­ter­est-bearing de­posits, the man­ner, if any, in which the bal­ance of a de­posit ac­count will af­fect the rate of in­ter­est; and any other cir­cum­stances that may af­fect the rate of in­ter­est and any other cir­cum­stance that may af­fect the rate of in­ter­est.”

Banks are also re­quired to no­tify the Com­mis­sioner of any change in bank charges 30 days prior, and in the case of in­ter­est rates, within seven days im­me­di­ately af­ter, or be­fore the ef­fec­tive date.

“Where a bank fails to com­ply with th­ese reg­u­la­tions, the Com­mis­sioner may pur­sue any re­me­dial mea­sures at its dis­posal as spec­i­fied in the (Financial In­sti­tu­tions) Act,” the le­gal notice adds.

CBL Gov­er­nor Dr Retšelisit­soe Mat­lanyane.

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