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FINANCIAL CONSUMER PROTECTION DIRECTIVE NO. 91-2020

National Bank of Ethiopia

FINANCIAL CONSUMER PROTECTION DIRECTIVE NO. 91/2020

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Whereas, trust and confidence of financial consumers promote financial inclusion, healthy financial transactions, and stimulate growth, stability, ethical innovation and efficiency in the financial system;

 

Whereas, innovation and development in the financial infrastructure and products and services, would possibly increase the risks and challenges particularly that low-income and less experienced financial consumers face;

 

Whereas establishing clear and objective financial consumer protection regulation, supervision, complaint handling and dispute resolution mechanisms are necessary to promote fair, responsible and transparent financial transactions and shape professional conduct of financial services providers towards financial consumers;

 

Now, therefore, in accordance with article 57 of the Banking Business Proclamation No. 592/2008 as amended by Banking (Amendment) Proclamation No. 1159/2019, article 59 of the Insurance Business Proclamation No. 746/2012 as amended by Insurance (Amendment) Proclamation No. 1163/2019, article 26 of the Micro-financing Business Proclamation No. 626/2009 as amended by Microfinance Business (Amendment) Proclamation No. 1164/2019 and article 20(2) of the National Payment Proclamation No. 718/2011, the National Bank of Ethiopia has issued this directive as follows.

 

1.                   Short title

This directive may be cited as “Financial Consumer Protection Directive NO.91/2020”

 

 

2.                   Definitions

Unless the context otherwise provides, for the purpose of this directive:

 

 

 

 

 

 

 

 

 

 

 

“financial product or service” means any product or service of a financial nature marketed, offered or provided to financial consumers by a financial service provider ;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

granted for the purposes of providing security for the obligations of a financial consumer in relation to any financial product or service;

 

 

 

 

 

 

 

 

3.                   Scope of applications

This directive shall apply to any financial service provider, financial product and service, and financial consumer and security provider.

 

4.                   General provisions

Financial services providers:

 

 

 

4.2.             Transparency and disclosure

A financial service provider shall ensure that financial consumers and security providers are provided with accurate, simple, clearly expressed and timely information about the features, likely risks, obligations and other terms and cost of any financial product or service or security they are considering.

 

4.3.             Product design and suitability

Financial service providers have general obligations to take reasonable steps to:

 

capacity and behaviors of financial consumers in the target market with a view to minimizing the risk of harm to those financial consumers; and

 

 

4.4.             Data protection

A financial service provider shall:

 

 

4.5.             Complaint handling mechanism

Financial services providers shall:

 

 

5.                   Specific provisions

 

 

 

 

 

5.1.2.               Unfair fees and charges

Financial services providers shall not charge a financial consumer any fee:

 

 

 

 

 

 

 

5.1.3.               Barriers to account mobility and account closure

Financial services providers shall have a duty:

 

 

5.1.4.               Obligation to acquire insurance

 

 

 

5.1.5.               Unfair credit-related practices

Financial services providers shall:

 

 

 

 

 

 

 

5.1.6.               Debt collection

 

 

 

 

 

 

their behalf in relation to debt collection acts consistently with the requirements of this Directive.

 

5.1.7.                   Unauthorized and mistaken transactions

Financial service providers shall:

 

 

 

 

 

 

5.2.             Transparency and disclosure requirements

Financial services providers shall ensure that any advertising or other promotional materials about the financial products and services:

 

 

 

 

 

 

 

 

5.2.2.               Form and manner of disclosure

Financial service providers shall ensure that any information, contract or notice provided to a financial consumer or security provider in relation to financial products and services shall be:

 

 

 

 

 

 

 

5.2.3.               Publications, availability and display of product pricing, terms and conditions

 

5.2.3.1 above:

  1. in a prominent manner that allows the financial consumer or security provider to retrieve and keep it for future reference ;
  2. at any of their or their agents‟ premises attended by the financial consumers; and
  3. display a prominent notice at such premises regarding the availability of standard terms and

 

 

 

5.2.4.               Key Fact Statements (KFS)

 

 

 

 

 

 

 

 

 

 

5.2.4.2 of this Article and any amendments to the existing ones may be prescribed by circulars of the National Bank.

 

5.2.5.               Contents of contractual document (terms and conditions)

Financial service providers shall clearly and prominently disclose the following information in the terms and conditions of the contract of any financial products and services offered to consumers:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.2.6.               Additional content requirements – consumer credit contracts

The following additional information is prescribed in relation to consumer credit contracts for the purposes of sub-article 5.2.5.14 hereinabove:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.2.7.               Additional contractual disclosure requirements – deposit account or stored value product

The following additional information is prescribed for the purposes of sub-article 5.2.5.14 hereinabove in relation to any financial product or service that includes a deposit account or stored value facility:

 

 

 

 

 

 

 

5.2.8.               Additional content requirements – payment or funds transfer product

The following additional information shall be prescribed for the purposes of sub- article 5.2.5.14 hereinabove in relation to financial product or service that includes a payment or funds transfer facility:

 

 

5.2.9.               Additional content requirements – insurance policy

 

 

5.2.10.        Signing and provision of final contract

A financial service provider shall be prohibited from entering into, or seeking to enforce against a financial consumer or security provider, any financial consumer contract or security contract unless:

 

 

 

security provider free of charge and it may be provided in any of the following ways:

  1. by giving it personally to the financial consumer or to the security provider or their agents;
  2. by sending it by post to the financial consumer‟s or security provider‟s last known or nominated address; or
  3. by sending it electronically to the financial consumer or to the security provider or their

 

5.2.11.        Periodic statement

Financial services providers shall

 

 

 

 

5.2.12.        Notification of changes

 

 

 

5.2.13.        Payment receipts

 

 

5.2.14.        Verbal explanations

upon request.

 

 

 

5.3.             Product suitability and responsible lending requirements

 

 

 

 

 

 

 

 

5.3.1 to sub-article 5.3.5 hereinabove. Such products may include:

 

 

 

 

 

 

5.4.             Data protection requirements

Financial Services Providers shall:

 

 

 

 

 

 

 

 

 

 

 

5.4.5.          protection of data

A financial service provider shall implement appropriate organizational, physical and technical measures to ensure that data is protected against misuse, unauthorized disclosure, accidental loss, destruction or damage.

 

5.4.6.          Collection of data

A financial service provider shall collect a financial consumer‟s or security provider‟s data only:

 

 

5.4.7.          Use of data

A financial service provider shall only use and disclose financial consumers and security providers data consistently with the original purpose of collection or with the explicit and informed consent of the financial consumer or otherwise required or permitted by this Directive or other laws;

 

5.4.8.          Treatment of data by third parties

Financial service providers shall take reasonable steps to ensure that any third party to whom they disclose data (regardless of whether the third party acts on the financial service provider‟s behalf) keeps it confidential and secure and treats it consistently with this directive.

 

5.4.9.          Access to data

 

 

 

5.4.10.       Correction of data

If financial consumers or security providers claim that any data about them held by a financial service provider is inaccurate or incomplete, a financial service provider shall:

 

 

 

 

5.4.11.       Relevant provisions of “Establishment and Operation of Credit Reference Bureau Directive No. CRB/02/2019”

The provisions of Directive Number CRB/02/2019 or any amendment thereto, which have a bearing on financial consumer protection shall apply to the extent possible.

 

5.5.             Complaint handling requirements

Financial services providers shall put in place, and apply, policies and procedures for a fair, accessible, transparent, free and efficient internal complaints handling;

 

5.5.2.       Arrangements

Financial services providers shall:

 

 

 

 

 

5.5.3.       Process and time line

 

provider has been prescribed in relation to specific types of financial products and services, by another directive of the National Bank, such prescriptions shall apply in the investigation of complaints in relation to such financial products and services.

 

(c) hereinabove; and

  1. contact information for any applicable dispute resolution service available to the complaint if the complainant is not satisfied regarding how the financial service provider has dealt with their complaint.

 

5.5.4.       Reporting unresolved cases to the National Bank and filing of complaint

5.5.3.4 hereinabove.

 

 

 

 

business days. If, however, lower number of days for investigation of complaints has been prescribed in relation to specific types of financial products and services by another directive of the National Bank, such prescriptions shall apply in the investigation of complaints in relation to such financial products and services; and

 

 

5.5.5.       Complaints database

A financial service provider shall:

 

 

 

6.                   Good governance, compliance and risk management

The board of directors shall:

 

 

 

 

 

 

6.2.             Senior management

Senior management of the financial service provider shall be responsible for:

 

 

 

 

6.3.             Professional competence

Financial service providers shall:

 

 

 

 

 

6.4.             Reporting to the National Bank

A financial Service provider shall:

 

 

 

 

7.                   Record Keeping

 

 

8.                   Other applicable directives

Any provisions of the Directive issued by the National Bank that have bearings to the protection of financial consumers, as far as they are consistent with the provisions of this directive, shall be enforceable.

 

9.                   Transitory arrangement

This directive shall be effective and in full force six months from the issue date.

 

 

10.               Penalty for non-compliance

 

 

11.               Issue date

This directive shall enter into force as of the 25th day of August 2020.

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