CB urges public to be cautious when transacting with financial institutions

The Central Bank said this week that it has received several complaints from the public claiming that some banks and financial institutions change terms and conditions in legal documents without their consent.

It is also alleged that when granting loans and advances to customers, some banks and financial institutions request customers to sign blank sheets/forms or incomplete documents such as loan agreements, pro-notes and account mandates and that they subsequently fill in these incomplete forms inserting terms and conditions that are detrimental to customers, the statement said.
“On examination of such complaints it has been found that such instances have occurred due to the following reasons - customers have overlooked the terms and conditions in the forms and documents; the lack of knowledge of the implications of signing incomplete/blank documents; urgency on the part of the customer in obtaining a facility; customers do not provide all the documents; and tendency of banks and financial institutions to include terms and conditions that are not easily understood by the general public,” it said.

In view of this the Central Bank drew the attention of banks, financial institutions and customers on their responsibilities as given below:

Due care by customers
A customer entering into an agreement with a bank or financial institution to obtain a service such as opening an account and obtaining a loan, credit card facility, a guarantee, has the following duties:

1. Read and fully understand the terms and conditions in the documents that he/she is required to sign.
2. Request an officer to explain such terms and conditions in vernacular (Sinhala, Tamil and English) if he or she has any difficulty in understanding or any doubts of such terms and conditions.
3. Request a copy of such documents.
4. Request to explain the rights, if any, of the bank or financial institution to change the conditions unilaterally.
5. Provide relevant documents on time.

Responsibilities of banks and financial institutions
1. Explain rights and duties of the customer under the contract.
2. Ensure completeness of such documents before obtaining the signatures.
3. Explain the bank’s or financial institution’s right, if any, to change the terms and conditions unilaterally.
4. Give a copy of such contracts, if requested, by customers.
5. Explain any terms and conditions that are not clear to the customer in his/her own vernacular.
6. Provide a checklist of documents required for the facilities to ensure all pre requirements are satisfied in a timely manner.

The above steps would serve to improve the quality of services and customer relationships, the bank said.