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Fraud, Cybersecurity Are Consumer Protection Challenges In The Financial System, Says CBN

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Amaka Obiefuna

The Consumer Protection Department of the Central Bank of Nigeria (CBN) has identified fraud and cybersecurity among the major challenges of consumer protection in Nigeria’s financial system.

In a presentation of the Department at the workshop organized by the Financial Correspondents Association of Nigeria (FICAN), the apex bank identified other challenges as rapidly changing landscape versus the need to build and enhance capacity;  infrastructure deficit (low internet penetration, power, security etc.); Understanding Consumer Behavior; Financial Inclusion Versus Consumer Protection; Low Financial and Digital Literacy; Need for robust Legal framework; Prudential Reg Versus Conduct Reg (CP);    (Safety & Soundness) Versus  (Consumer Interest); Need for greater stakeholder collaboration (Regulators, FSPs, LEAs CSOs, CAGs, Development Partners etc.); Security and Privacy of data; Cost and Trust Deficit and need for robust regulatory enforcement.ays it is addressing these challenges through Consumer Protection Framework; Establishment of Industry Fraud Desks;  Strengthening Internal Controls; Routing all e-transactions (interbank) through the Central Anti- fraud Solution (HEIMDALL); Introduction of Biometrics authentication in the Ecosystem  (‘Integrated’ BVN Approach);  Cybercrime Law; NeFF; Bankers Committee; Committee of Chief Compliance Officers of Banks;  Various Guidelines on electronic payment and enhancing sensitization and awareness.

CBN’s CPD says “there is need for more investment in research to sustain innovation, be able to address the associated consumer risks and enhance the regulatory process”

In his presentation titled “COVID-19 and Fintech in the Nigerian Financial System”, the PhD Deputy Director, Research Department, National Deposit Insurance Corporation (NDIC), Kabir Katata said fintech sector is thriving in Nigeria because of the youth population, increasing smartphone penetration and a focused regulatory drive to increase financial inclusion and cash payments.

NDIC’s Director, Bank Examination Department, O. O. Babatolu said in his presentation titled “Risk Management Strategies for the Banking Industry to Deal With a Pandemic or Crisis” that “the Nigerian Banking System is not under threat of systemic crisis. Prompt and decisive interventions by the regulatory authorities has provided counter cyclical buffers for the economy and the financial system.  We all have critical roles to play in fostering financial system stability. “

He highlighted the containment strategies that have been taken saying “he Federal Government reviewed the 2020 budget and cut/delay non-essential capital spending by N1.5 trillion (close to 1% of GDP).  Three months repayment moratorium for all TraderMoni, MarketMoni and FarmerMoni loans and similar moratorium was given to all FG-funded loans issued by the Bank of Industry, Bank of Agriculture and the Nigeria Export Import Bank.  Conditional cash transfers were paid to the most vulnerable at internally-displaced person’s camps.  The reduction of price of crude oil in the international market- government reduced the pump price of petrol from N145 per litre to N123.59 per litre on 1st April, 2020.  The Federal Government commenced Special Works Program (SPW) for the creation of 774,000 jobs and there was planned rollout of N2.3 trillion stimulus package for MSMEs to weather the pandemic.”

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