Friday, June 21, 2024

Government reinforces consumer protection in financial services sector

The Assistant Minster of Trade and Industry, Maxwell Motowane, last week assured the public that government will reinforce the law to make sure that consumers are protected against unfair trade practices by industry players in the financial services sector.

Motowane said that government has observed with worry complaints from consumers that they are not serviced properly, and legislation has been improvised to include the banking sector, which has for a long time been a subject of complaints from consumers.

“Government will ensure that there is requisite legislation to regulate most of the sectors, including the banking sector, on which today’s theme is based,” said Motowane.

He added that the international consumer movement advocates for consumers to have knowledge and education on matters relating to finance so that they can make optimal use of their scarce financial resources.

The Bank of Botswana Act has been supplemented with the Non-Banking Institutions Act, which was introduced because there are arising challenges in the market.

“The Act regulates businesses such as micro-lenders, insurance and pension funds,” said Motowane.

The non banking institutions act was crafted after it emerged that consumers are exploited by service providers who bind them with unfair contract terms. The banking sector has also gone a step ahead to form a banking association to regulate their operations. The banking association has appointed a banking adjudicator to deal with consumers complaints.

On top of that, the Consumer Protection Act of 1998 provides for the protection of consumers by means of investigation, prohibition and control of unfair business practices.

“Through this act, my ministry ensures that consumer protection measures stipulated in other pieces of legislation are adhered to,” said Motowane.

He added that consumers are faced with numerous problems and challenges when engaging in financial transactions because they have limited knowledge of financial matters, such that they unwittingly bind themselves with unfair contract terms and conditions, high interest rates and lack of disclosure of requisite information.

Motowane said that his office receives a lot of complaints against the financial services sector, and has, as a result, commissioned a study to assess the skills required by consumers when purchasing financial services.

“The results will assist us in designing a financial literacy program for consumers,” he said.

Motowane also urged the financial services sector to take responsibility for the products it offers.


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