SHORTCHANGING BANK CUSTOMERS
The growing cases of ethical issues should worry financial institutions in the country
Hardly a day passes without stories of malpractices within the banking industry, especially in the social media as customers render accounts of how they were being short-changed by their banks. While the existence of fraud and all manner of sharp practices in the banks is neither uncommon nor unexpected, its prevalence is negatively impacting the sector and threatening to undermine public faith in the industry. We call on the authorities to see this malaise as a challenge and respond with measures that will safeguard the banking sector.
In 2017, Automated Teller Machine (ATM) fraud, according to reports, accounted for the highest rate of fraud with an actual loss of N497.64 million and a fraud volume of 9,823. In the same manner, the Nigerian Inter-Bank Settlement System (NIBSS) revealed last year that the banking industry lost N12.30 billion to various fraudulent practices between 2014 and 2017. Also recently, the Chartered Institute of Bankers of Nigeria (CIBN) disclosed that no fewer than 2,122 bank customers lodged complaints against their banks to the sub-committee on ethics and professionalism between 2001 and 2018. The committee was responsible for resolution of disputes relating to unethical practices between or among banks as well as between banks and their customers.
Though ATM fraud is a common form of infraction, bank customers also complain about sundry other sharp practices. These range from credit card scam, to stealing of money from customer’s account. It is also alleged that some fraudulent bank staff habitually access and manipulate clients’ accounts, operate fictitious accounts and fiddle with those held by deceased customers whose signatures are usually forged with the intention to illegally withdrawing money from their accounts. Aside the foregoing cases, bank employees also commit computer fraud. By logging into the computer system through remote sensors, some unscrupulous bank staff also connive with others to tamper with diskettes and flash drives which then enable them to access unauthorised domains. With that, they credit accounts for which funds are not intended.
While the aforementioned are specific instances of insiders’ abuse within the system, we maintain that the commercial banks are also culpable of deliberately promoting corporate unethical behaviour and shady business practices. Indeed, the frightening scale of these malpractices is an indictment on many of the commercial banks for failing to tighten their internal control system and for not adopting code of ethics to govern their behaviour, particularly on conflict of interest and the handling of confidential information. Unfortunately, the Central Bank of Nigeria (CBN) is not doing enough to curb these malpractices.
Money laundering, investment fraud, toxic loans, banking laws violation are some of the broader corporate unethical practices perpetrated by the commercial banks. The banks are also fond of arbitrary deductions from customers’ accounts under the guise of SMS charges, card maintenance fees and ATM charges, among others. As a result of these indiscriminate charges, many customers have resorted to closing their saving accounts, resulting in the financial exclusion of many of our citizens. To worsen maters, despite the huge turn overs and after-tax profits many of them declare yearly, they discourage small businesses from thriving by imposing difficult loan conditions.
If there is any lesson to learn from the recent failure of one of the nation’s commercial banks, Skye Bank Plc, it is the need to improve on the corporate governance culture of our financial institutions in Nigeria. It is common knowledge that bank failures don’t happen overnight. The build-up is usually over a reasonable period, and results from poor management, insider abuses and other unwholesome practices that have to be dealt with by the relevant authorities. They must work to ensure that integrity is restored to the Nigerian banking hall.
