The Client Protection Principle describe the minimum protection the customers may expect from their banking instituitions. Client Protection Principle is a part of customer relationship marketing, which will help to create most valued customers, build relationship and retain them to make them partner of the organization.
The international instuitions working for customer protection are G20, Financial Stability Board (FSB), Organization for Economic Cooperation and Development (OECD). They have prepared some general principles on client protection. They are:
Banks should deal fairly and honestly with customers at all stages of their relationship, so that it is an integral part of culture of a bank.
Bank should provide uptodate information about product and services to consumers. This information should be easily accessible, clear, simple to understand, accurate, not misleading and include any potential risks for the consumer. It should include the rights and responsibilities of each party including the mechanism for either party to end banking relationship, as well as details of fees, pricing and any potential penalties that the consumer may incur.
Bank should develop programs and appropriate mechanisms to help existing and future customers develop the knowledge, skills and confidence to appropriately understand risks, including financial risks and opportunities, make informed choices, know where to go for assistance when they need it.
Banks should work in a professional manner for the benefit of customer during their relationships where a bank is primarily responsible for the protection of financial interests of client.
Bank should protect and monitor consumer deposits, savings and other similar financial assets through development of control systems with a high level of efficiency and effectiveness to reduce fraud and misuse.
The licensed financial instituition should protect financial and personal information of client through appropriate control and protection mechanisms.
Customers should have access to adequate complaints handling mechanisms that are accessible, affordable, independent, fair, accountable, timely and efficient.
Customers should be able to search, compare and switch between products, services and providers easily and clearly at a reasonable cost.
Banks and their authorized agents should have as an objective to work in best interest of their customers and be responsible for upholding financial customers protection. Bank should be responsible and accountable for actions of their authorized agents.
Bank should have a written policy on conflict of interest and ensure that this policy will help to detect potential conflicts of interest. When the possibility of a conflict of interest arises between bank and third party, this should be disclosed to customers.
The customers also have some responsibilities towards the bank and financial institutions which helps to maintain sound business relationship between them. They are:
The customer should provide full and correct information to the bank. Do not give false information.
It is the responsibility of customer to read all the information provided by the bank. Customer should understand and comply them in future.
The customer should not hesitate to ask questions to bank employees if any information provided by bank is not cleared.
The customer should know how to lodge complains in right manners and ways of making complains via hot-line, website, help desk, complain box.
The customer should honestly follow terms and conditions of the bank using the product and services.
The customer should know about the risk integrated with the product and services so that they can avoid the risk.
The customer should only apply for those product and services which are needed.
The customer should immediately report un authorized transaction to their bank if any.
The customer should not disclose their bank details or other sensitive personal and financial information like otp, password etc to third party.
The customer should not hesitate to talk to the bank personnel if encounter any difficulties while using product or services.
The customer update their information in time by updating KYC form and keep their information uptodate.
The customer should always use own mail address while communicating with the bank.
The customer should know about power of attorney and provide only when needed. This will give access over financial matters to whom you are giving power of attorney.
The customer should not sign on incomplete forms and blank papers. Customer should make sure all required fields are completed and crossed where not available/necessary to fill. Do not sign empty or partially completed forms.
Customer should review all the documents before signing them to ensure no errors are made in the account number, amount or anyother information. Signature is considered as approval and agreement of the document content.
The customer should maintain records of all copies provided by the banks for future references.
Nepal Rastra Bank limited has provided unified directive number 21 in 2075 regarding client protection to all banking and financial institutions. They are:
The licensed financial institution should provide information about terms and conditions, services and charges, fines and penalties, types of accounts and loans, interest rate calculation method, prepayment charges, late fees, fines and penalties on loan. All the information should be published in the websites.
The licensed financial institution should provide all infomation about the product in simple and clear to the customers in both english and nepali language for internal and international trasaction purpose
The licensed financial institution should provide all notices and infomations about the product easily accessible, clear written in simple language so that customers can understood.
The licensed financial institution should provide simplified banking so that illiterate, senior citizen and specially abled person can also enjoy banking facilities.
The licensed financial institution should inform the customer about the changes in interest rate, service charge and terms and conditions. The national level institution should publish notice on national daily newspaper and Regional level institution should publish notice on regional/district/province level newspaper.
The licensed financial institution can not collect fees on account opening, issuing cheques and statements, activing dormant account, closing accounts after six months of account opened, stop payments and ABBS, but can charge if statement of same duration demanded for more than once.
The licensed financial institution should submit application to credit information bureau for blacklisting purpose to those individual, firm and company who issue cheque without having sufficient fund maintained in their accounts as per NRB unified directive.
The licensed financial institution should not take any service charges more than prescribed by others instuitions. For eg: Bank should not charge more than prescribed by CIB for Credit Information, blacklisting and other fees like insurance, collateral valuation charge provided by other service provider. The financial institution cannot take any charge for electronic cheque clearing below Rs 200000.
The licensed financial institution should maintain help desk to handle complaint of public by establishing hot-line number, online portal on website.
The licensed financial institution should mention the prepayment charges in the loan agreement. The institutions cannot collect charges if the client wants to prepayment of loan due to changes in interest rate or terms and conditons which was previously mentioned on loan agreement.
The licensed financial institution compulsorily provide information about their product and services via financial literacy program. They should encourage people to use banking services through financial literacy program.
The licensed financial institution should maintain privacy of the customer business transaction and financial statements. The information should not be given to unrelated and unauthorised persons. This provision do not restrict to provide information to regulatory authority.