The Consumer Protection Council has directed the management of First City Monument Bank to refund a total of N1.54bn to the Bauchi State Government, being the amount said to be illegally deducted by the bank from the state’s loan account.
According to the council in a statement issued on Sunday, the order was made after the conclusion of an investigation into a petition by the state government.
The state had claimed that it was short-changed by the FCMB to the tune of N1.86bn as excess interest and other charges on its loan account with the bank.
The CPC also stated that the state government decided to send the petition to the council after the Central Bank of Nigeria had declined further adjudication on the case through a letter dated July 15, 2015.
The CBN had in the letter to the petitioner requested it to “seek alternative means of redress as the case is hereby deemed closed.”
But the CPC said in the statement that the FCMB, which was known as First Inland Bank Limited when the loan was granted, gave the state two-term loans of N10bn and N3bn in 2009 and 2011, respectively.
The loans, according to the state government, were given at 13 per cent floating interest rate, while the FCMB said the interest was increased to 21 per cent.
Following the complaint to the CPC by the state government, the statement said the Director-General of the council, Mrs. Dupe Atoki, constituted a panel of experts that deliberated extensively on the matter and provided the parties the opportunities to make representations.
The statement read in part, “Having reviewed the various responses, documents and presentations made by the parties at the investigative hearings, the council disclosed that it found out that the increase in the interest rate was not duly communicated to the Bauchi State Government and that the interest rates applied across board by the FCMB were excessive and arbitrary with some charges as high as over 50 per cent
“The council also found that apart from the arbitrary and excessive interest charges, the substantial part of the unlawful deductions was made from the principal loan repayment.
“Also identified as part of the illegal deductions by the CPC’s investigation was the excess processing fees and even management fee, which was not provided for in the offer letters.
“The council, therefore, ordered the FCMB to refund to the Bauchi State Government all excess interest charges and unlawful deductions in the total of N1,542,775,841.58 and at the prevailing interest rate.”
The CPC ordered the bank to report compliance within 30 days of receiving its directive.
It also ordered the bank to develop and present to it a Customer Complaint Resolution Policy within 30 days of the receipt of the order and to post it on its website.
Source:© Copyright Punch Online