What is meant by client protection? What are its principles? Explain in details. 2074
The banking customer protection principles is the guideline document that will enable the bank to deliver required level of fair treatment, offer transparency, behave ethically and keep client’s data secured and private.
Client protection means safeguarding the interest and rights of customers. In other words, it refers to measures adopted for the protection of customers from unethical standards in the business.
Client protection involves responsible financing. This is not only for the clients, but responsible financial inclusion protects baking business and industry as a whole. It is concerned with good ethics and smart business. Protection of client would build long term relationship with clients based mutual trust, understanding and respect. The client protection principles are the minimum standards that clients should expect to receive.
The concept of client protection has become important thing to be considered. This concept is typically for the party who is in some way engaged with the business. It allows client necessary facilities and prevents for some services that they cannot use.
Principles
1. Product design and delivery
Financial institution takes adequate care to design products and delivery channel in such a way that they cause client’s needs and wishes taken into account. In compliance with the bank’s internal policies and procedures, products and delivery channels should not harm the clients.
2. Prevention of over-indebtedness
Banks should analyse the capacity of borrower to repay without over lending them. The bank takes all the responsible steps to disburse loan only to those borrowers, who have demonstrated sufficient ability to repay, while ensuring that the loan disbursed to them do not create a serious risk for the borrowers to have over indebtedness.
3. Transparency
Bank communicates clear, sufficient and timely information in a manner and language that client can understand. This helps client to make decision. The need for transparent information on pricing, terms and conditions of services is highlighted. Costs and all conditions of providing financial services must be transparent and clearly communicated.
4. Pricing
Responsible pricing is both affordable to clients and sustainable for financial institutions. Price is influenced by wide range of factors. Pricing terms and conditions will be set in a way that it would be affordable to clients. Service charges, interest rates, fines and penalties are examples of pricing for products in a bank.
5. Grievances handling
Banks should take actions with examination of grievances and suggestions provided by clients. If clients express their opinion and suggestions on bank’s operation, quality of services and others, the bank in turn should immediately respond and take necessary steps to resolve the issue.
6. Privacy of client’s data
Privacy of client’s data should be respected in accordance with the laws and regulations. All the interaction between the bank and client are strictly confidential, the bank promises not to transfer and disclose to any third party.
7. Business ethics
The bank’s employees must adhere to the high standards of business ethics. Necessary safeguards are implemented in the bank to reveal and eliminate corruption.
Banks and customers share the obligation of responsible provision and responsible use of financial products and services. Customer depends on banks to uphold their responsibility for client protection and likewise, banks depend on customers to be informed users of financial services. It also describes the customer’s responsibility for knowing services, asking questions and giving correct informations.
-Banks must treat customers fairly and equitably.
-Banks must spread financial education and awareness
-Both banks and Customers must be protected against fraud.
Customers responsibility:
-To be honest with information they provide
-To carefully read all informations provided by banks
-Ask questions in unclear conditions
-Know how to make a complaint
-Use the products or services in line with the terms and conditions
