Poor service chokes Financial sector

Customers are being subjected to poor services, particularly in the financial sector and a trend analysis based on Reserve Bank of Malawi (RBM) reports show that the situation has deteorioated over the past four years.

The RBM Financial Institutions Supervision reports from 2014 to 2018 show that poor customer service has continued to dominate the list of complaints addressed to the financial regulator.

In 2014, financial knowledge on the part of the consumers had dominated the list of complaints during the review period.

For instance, out of 203 complaints resolved in 2018, 89 were related to poor customer care, 63 to financial abuse while 10 were due to lack of financial awareness and capability on the part of consumers.

The report shows there are many complaints from the microfinance institutions (97) and the insurance (91) sectors while the banking sector had 59 complaints.

In the prior year, 133 complaints were related to poor customer care, 55 to financial abuse and 54 to lack of financial awareness and capability on consumers with the insurance sector at 139, trailed by microfinance and banks both at 78.

“The number of financial consumer complaints decreased in 2018, mainly as a result of enhanced legal and regulatory framework on financial consumer protection and market conduct.

“The registrar continued to undertake various financial literacy initiatives aimed at bolstering financial consumer awareness,” reads the RBM 2018 report.

In addition, the report said the central bank conducted an examination of various categories of financial institutions to establish the extent of compliance with market conduct regulations.

Consumers Association of Malawi (Cama) executive director John Kapito, in a written response on Friday, said it is disappointing that complaints on customer care are dominating.

“This is a reflection of the financial institutions’ failure to invest more on the training of their members of staff. It has been noted that most of their complaints handling has been left mostly to the security guards which shows lack of interest to interact with consumers.

“It must be noted that the RBM collects only a small fraction of complaints of the many abuses in these sectors. Some are reported through other institutions and others go unreported,” he said.

Meanwhile, the 2018 Malawi Financial Literacy and Consumer Protection Household Survey by RBM has revealed an increasing trend in access to formal financial services and products from 17 percent in 2014 to 29 percent in 2018.

Access to semi-formal services (microfinance and Saccos), on the other hand, decreased slightly to 5.3 percent in 2018 from 5.5 percent in 2014 while access and usage of informal financial services, including village savings and loan associations and katapila (usury), also decreased from 52 percent in 2014 to 45 percent in 2018. The number of people who are excluded from the financial sector dropped from 34 percent in 2014 to 22 percent in 2018.

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