House of Reps moves to stop fraudulent deductions by commercial banks

The House of Representatives is moving toward safeguarding Nigerian bank customers from the growing menace of unauthorized, fraudulent deductions by commercial banks.

This development follows the second reading of a “Bill for an Act to amend the Banking and Other Financial Institutions Act 2020 and for Other Related Matters”.

The Bill, spearheaded by Hon. Moses Fayinka, representing Mushin II Federal Constituency of Lagos State, seeks to curb the growing scourge of fraudulent deductions from customers’ accounts by commercial banks.

Leading the debate, Fayinka painted a grim picture of rising financial crime. He revealed that the Nigerian banking industry reported a staggering 101,801 cases of fraudulent deductions in 2022, while 48,703 similar cases were recorded in 2023. Despite the decline in numbers, the impact on individuals and businesses remains profound, with billions of naira disappearing from customer accounts under suspicious circumstances.

“There is an alarming rise of bank fraud or unauthorised withdrawal of deposit funds in Nigeria,” Fayinka stressed. He argued that the problem is systemic, with many fraudulent activities slipping through the commercial banking framework. “This Bill is in consideration of the uprising of various financial crimes within the country, with many of such passing through financial institutions or the commercial banking system.”

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This effort aligns with Nigeria’s broader policy objective of cleaning up the financial ecosystem. As cases of cyber fraud and illicit withdrawals surge, customer confidence has wavered, with victims frequently lamenting slow responses or outright inaction from banks when disputing fraudulent deductions.

While the bill aims to clamp down on immediate fraudulent practices, analysts believe that it could signal the beginning of more comprehensive reforms. Consumer advocacy groups have long criticised the banking industry for lacking robust internal security and transparency. Issues such as hidden charges, unauthorised fees, and delayed reversal of erroneous debits have only added to customers’ frustration.

The Bill has now moved past its second reading, a critical milestone in the legislative process. If it successfully passes the third reading, it will be sent to the Senate for concurrence and, subsequently, to the President for assent.

Industry stakeholders and financial experts will closely monitor the progress of this legislation, especially given the high stakes involved. If enacted, it could introduce new layers of accountability that compel banks to prioritise the protection of customers’ funds over profit-driven motives.

For now, Nigerians are watching with cautious optimism, hoping that this legislative move marks a turning point in the fight against fraudulent banking practices. Should the amendment become law, it could restore a measure of trust in the financial system—ensuring that the money in your account stays yours.