Customers groan as banks defy agreement on CoT

Customers are groaning under the heavy burden of Commission on Turnover (CoT) being charged by banks in defiance of a collective agreement between them and the Central Bank of Nigeria (CBN) that the charges be phased out this year, BusinessDay investigations reveal.

Some officials of the banks who spoke to BusinessDay said they are not towing the line because nobody is taking the lead in the industry on the effective compliance.

But the CBN insists that since it was a collective agreement, compliance should have been automatic, while advising customers to explore all available means of complaining to the affected banks before escalating it.

“The agreement still stands and we expect the banks to comply on the agreement. Customers should first lodge their complaints with the banks, then CBN,” Ibrahim Mu’azu, CBN spokesperson told BusinessDay.

But a customer of one tier two bank who made a withdrawal of N30,000  at the weekend, was charged N100.00k COT. The same customer made another withdrawal of N120,000 and the same amount was charged as COT. When he enquired from his account officer, he was told that no bank had started implementing zero COT and that such charges would continue until further notice.

BusinessDay investigations showed that almost all the banks visited in Lagos, Abuja and some other state capitals were still charging the CoT, a development which they say is cap[able of eroding confidence in the industry.

Further investigations showed that some bank head offices are yet to instruct their branches to halt the charge.

But some analysts insist that the development seems to be eroding confidence in an industry that should thrive on integrity and trust.

“It is not a good development for banks to promise their customers and then renege on that promise. Banks thrive on trust and integrity and once such elements are being abused, customers will begin to lose confidence in the industry,” said Friday Ameh, an energy analyst.

COT ought to have been phased out on December 31 (2015) according to the CBN directive. The CBN in 2013 released the guidelines titled: “Guide to Bank charges” which gradually phased out COT in 2016. According to the guidelines “COT was reduced to N3 per N1,000 in 2013, N2 per N1,000 in 2014 and N1 per N1,000 in 2015 while it will be phased out in 2016.”

“Some banks have continued to charge COT that was supposed to be phased out effective from January this year. “It was learnt that in some banks, the amount charged as COT depends on the customers relationship with the banks”, Edward Pwajok (PDP-Plateau), House of Assembly said.

But some bank officials spoken to said it was still early for customers to ascertain whether or not they have been charged CoT until the end of the month, when details of charges for the month are compiled in their banks statements.

The CBN had in a circular in June 2014 titled: ‘Implementation of the revised guideline to bank charges- Commissions on Turnover’, referenced FPR/DIR/GEN/CIR/01/008, decried situations where some banks continued to charge CoT at the rate of N3.00 per mile, which was supposed to have come down to N2.00 agreed rate for the year.

However, the House of Representatives last week mandated the apex bank to ensure that all the Deposit Money Banks operating in the country  immediately refund all COT charges this year or face severe penalties.

To this end, the House issued a 30-day ultimatum to the apex bank to ensure compliance of the refund and full implementation of the zero COT by commercial banks.

The House, after the adoption of the motion sponsored by  Edward Pwajok (PDP-Plateau), mandated its committee on Banking and Currency to ensure compliance with the directive and report back to the chamber within four weeks.

The lawmaker told the House that the zero COT policy which is meant to alleviate the suffering of citizens, boost the economy by encouraging transactions through the banks is not being implemented to the detriment of the economy.

He further told the members that the CBN zero COT policy which according to him, is in tandem with international best practices, is not being implemented by commercial banks allegedly because the apex bank has not issued any formal circular directing implementation of the zero COT.

According to Pwajok, “some banks have continued to charge above N1 per N1,000 turnover that was effective from January this year. “It was learnt that in some banks, the amount charged as COT depends on the customers relationship with the banks,” he said.

He further lamented that the monetary policy which was applauded by the general public, is being flagrantly ignored and undermined by commercial banks with attendant costs on ordinary citizens who are bank customers.

HOPE MOSES-ASHIKE & KEHINDE AKINTOLA