It is refreshing to note that, Bank of Ghana has notified the public about the Bank’s concern with regards to the practice whereby banks and other financial institutions charge their customers unfair and inappropriate fees. Such practices, according to Bank of Ghana, tend to defeat the financial inclusion agenda and the need to protect customers’ interest[1].

Consequently, Bank of Ghana has abolished the following fees, charges and other unfair practices that banks previously engaged in. As consumers of banking services, it is important that we all take note of these changes and challenge our banks whenever they seek to enforce such practices against us.

1.   Banks should not overcharge Credit Insurance Premium – Banks that require life insurance on certain loans, such as mortgages, can choose the insurance companies they prefer. However, the premiums charged should be the same as what the insurance companies charge for their services to others, and should not be overpriced. Banks should also not keep premiums paid by customers under the pretext of rolling out an internal insurance policy. However, Bancassurance arrangements are allowed.

2.  Banks should not charge maintenance fees on savings accounts – No bank should deduct ‘maintenance fees’ on savings accounts of depositors. Customers should only pay for services they have personally subscribed to.

3.    Banks should not charge customers for withdrawal of their money over the counter (in the bank) if the withdrawal is not up to a certain amount – Some banks impose charges on over-the-counter withdrawals because they want their customers to use ATM or Online banking. By Bank of Ghana’s new notice, no bank should charge a customer any fee for withdrawing her own money below any set amount from the banking hall. This is a very welcome development because one bank I have an account with, charges a fee for withdrawing an amount less than GH₵3,000 over the counter in the banking hall.

4.  Banks should not change the ownership of collateral documents into joint names with the borrower– No bank should demand a customer to change the ownership of any asset (for e.g. car, house) into the joint names of the customer and the bank. This will allow the customer to be able to borrow from multiple sources with the same asset as a registered security.

5.  Banks should not charge interest on penalty rates – When a customer delays in paying a loan, the higher penalty interest charged on the delayed payment should not also be subjected to interest payment. This means that, the penal interest used when a customer fails to make an interest or principal payment should be on the defaulted interest or principal payment only. It should not be calculated on the interest plus the principal sum outstanding. Otherwise, the customer will be punished twice for the delay in payment.

6.   Banks should quote their interest rates only on Annual basis. Quoting interest rates on monthly basis is not allowed. – Banks can no longer quote their interest rates on a monthly basis. Also, banks should quote their Annualized Percentage Rate (APR) in addition to the annual interest rate.

7.    Banks should obtain the full personal details of persons who make a deposit or withdrawal from an account on behalf of another person – All banks should take the full name, address, I.D and telephone number of every person who is sent by another to make a deposit or withdrawal from that other person’s account. This is known as “third party deposit/withdrawal”.

 

Well done, Bank of Ghana, for saving us from these nuisance fees and charges, and exploitative interest rates imposed on customers.

FOOTNOTES

[1] Notice to Banks and Specialised Deposit-taking Institutions (SDIs), Notice No. BG/GOV/SEC/2021/12; Abolition of Unfair Fees, Charges and Other Practices in the Banking Sector.