Financial market complaints up 18%
Consumers complaints against financial market players have jumped by 18 percent to 578, with pensions and insurance sector claiming the highest number of cases lodged to the registrar of financial institutions, figures shows.
The 578 complaints lodged in 2021 compares to a total of 486 cases the registrar of financial institutions recorded in 2020, representing an 18 percent rise, according to the Reserve Bank of Malawi (RBM) analysis.
In its 2021 Financial Institutions Supervision Report released on Tuesday, RBM said it handled 599 complaints, including 21 that were brought forward from the previous year.
The analysis shows that the pension sector registered the highest number of complaints at 284 while insurance had 138 complaints.
This was followed by the microfinance and financial cooperatives, banking and capital markets sectors, which recorded 39, 92 and 15 complaints in that order.
Reads the report in part: “Pension complaints mostly related to non-remittance of pension contribution and employers declining to facilitate processing of payment of pension benefits with pension administrators.
“In addition, the registrar received complaints relating to delays by both employers and pension administration companies in processing pension benefits.”
The analysis further shows that in the insurance sector, the complaints related to delayed settlement of policy claims and dispute surrender values of policies.
In the microfinance sector, complaints were mostly due to delayed resolution of complaints, deducted monthly loan repayments prior to disbursement of loan funds and over-deductions for fully repaid loans.
The report shows that complaints from the banking sector emanated from delayed refunds of customers’ funds for failed interbank automated teller machine transactions and erroneous account deductions.
Reacting to the analysis, particularly on pension issues, Malawi Congress of Trade Unions president Charles Kumchenga said on Tuesday employees are losing on their savings as a result of employers’ failure to remit pension funds.
“By not remitting the pensions, the employers are committing a criminal offense because they deduct the funds from employees which is reflected on monthly pay slips, but fail to remit the same to pension fund administrators,” he said.
Employers Consultative Association of Malawi executive director George Khaki said the developments in the pensions sector reflect the economic environment where employers are not generating enough revenues to meet their obligations, including pensions.
He, however, said there are also a minority of employers who just do not want to follow the law.
“In any case, we encourage employers that have challenges to discuss with their workers and the regulator and agree on a plan to make good of their peculiar situations,” he said.
Bankers Association of Malawi chief executive officer Lyness Nkungula and Insurance Association of Malawi president Adbul Mageed Dyton were yet to respond to our e-mailed questions as we went to press midday yesterday.
But Nkungula is on record as having acknowledged that the banking sector faces some loopholes, indicating that banks are continuously working towards addressing each of the concerns.
Meanwhile, the RBM has indicated that a total of 2 265 complaints were successfully resolved compared to 206 complaints in 2020.
Out of these cases, 86 related to poor customer care, 67 complaints due to financial abuse by financial institutions and employers while 53 cases were due to lack of financial awareness and capability, and misunderstanding of product terms and conditions on the part of consumers.
The RBM said fraud-related issues accounted for eight of the complaints, seven complaints bordered on inadequate transparency and disclosure by financial institutions while one case was a result of mis-selling of a product.
RBM Governor Wilson Banda is quoted in the analysis as having said that the central bank will continue to undertake various financial literacy initiatives aimed at bolstering financial consumer awareness.
“In addition, market conduct examinations of diverse categories of financial institutions were carried out with the objective of establishing the extent of compliance with market conduct regulatory expectations,” he said.
