AFCOP calls on BoG to be proactive in protecting financial consumers

The Alliance for Financial Consumer Protection (AFCOP), an advocacy group dedicated to promoting and facilitating the protection of financial consumers in Ghana, is calling on the Bank of Ghana (BoG) to be proactive in protecting financial consumers, especially during the COVID-19 pandemic.

AFCOP says it is making the call on the back of “the passive and hands-off approach adopted by the Bank of Ghana when it comes to ensuring there’s adequate relief for financial consumers.”

While the Bank of Ghana has announced some measures including interest rate reductions and waiver of mobile money transfer fees for transfers up to GHS100, AFCOP says these measures are “mere tokenism.”

AFCOP in a statement noted that while some financial institutions have made public announcements on relief packages they have on offer for consumers, it believes some are merely for Public Relations (PR) purposes with no real benefits accruing to consumers.

The reasons being:

(i) What is the point in offering an interest rate reduction to borrowers but demanding that they make repayments during the period of the pandemic, when in fact the borrowers are not in a position to make the repayments because of diminished incomes? What will inevitably happen is, the customers will default and the Banks will levy penalty interest (which is far higher than the 2% per annum interest rate rebate being offered) thereby making customers worse off.

(ii) What is the point in capping the fee-free threshold for mobile money payments at GHS100, when in fact a chunk of payments involves amounts in excess of GHS100? What will happen is, customers who need to make payments in excess of GHS100 will have no incentive to use mobile money and thus resort to a cash transaction, particularly when such customers will not receive any relief for the first GHS100 (i.e. a customer who makes a payment of GHS250 will still pay GHS2.5 in fees instead of GHS1.5 if the first GHS100 were fee-free). Thus, the intention of protecting consumers from COVID-19 by reducing cash handling is defeated.

AFCOB noted that the Bank of Ghana must be seen to be proactively championing appropriate measures to adequately protect the interests of consumers as stipulated in Section 3(2)(d) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

AFCOP is calling on the Central Bank to urgently implement the following measures to provide critically needed relief to financial consumers:

(1) Direct all Banks and SDIs to immediately suspend account maintenance charges and/or commission on turnover (COT) charges for all personal and SME customers.

(2) Direct all Banks and SDIs to immediately suspend all cards/ATM charges (issuance fee, maintenance fee, withdrawal fee etc.) for all personal and SME customers.

(3) Direct all Banks and SDIs to immediately offer a minimum of 3 months repayment holiday (both principal and interest) to personal and SME borrowing customers impacted by COVID-19.

(4) Direct all Mobile Money Operators to immediately offer a minimum of 3 months repayment holiday (both principal and interest) to all MOMO loan customers.

(5) Direct all Mobile Money Operators to immediately suspend transfer fees for all amounts.

AFCOP said it believes the proposed measures are feasible and will provide a much-needed relief to financial consumers during this difficult period of the COVID-19 pandemic.