Circular No. 01/2020 on the Sanctions Matrix Applicable to Financial Products and Services Providers, Issued Pursuant to Regulation No. 001/2019 on Consumer Protection for Financial Products and Services

BANQUE DE LA REPUBLIQUE DU BURUNDI
LE GOUVERNEUR
CIRCULAIRE N° 01/2020 RELATIVE A LA MATRICE DES SANCTIONS APPLICABLES AUX FOURNISSEURS DES PRODUITS ET SERVICES FINANCIERS, EDICTEE EN VERTU DU REGLEMENT N° 001/2019 RELATIF A LA PROTECTION DES CONSOMMATEURS DES PRODUITS ET SERVICES FINANCIERS

Vu la loi n° 1/34 du 02 décembre 2008 portant Statuts de la Banque de la République du Burundi ; Vu la loi n° 1/17 du 22 août 2017 régissant les activités bancaires ; Vu la loi n° 1/07 du 11 mai 2018 portant système national de paiement ; Vu le règlement 001/2017 relatif aux services de paiement et aux activités des établissements de paiement ; Vu le règlement 001/2018 relatif aux activités de microfinance au Burundi ; Vu le règlement n° 001/2019 relatif à la protection des consommateurs des produits et services financiers ; La Banque de la République du Burundi, ci-après désignée la « BRB », édicte la présente circulaire.

Article 1: Object and Scope of Application
This circular aims to specify the sanctions applicable to financial products and services providers approved by the BRB in case of violation of the provisions of Regulation No. 001/2019 on consumer protection for financial products and services.

Article 2: Categories of Breaches
The breaches retained by the sanctions matrix are subdivided into the following categories:

1. breaches relating to fairness in the offering of financial products and services;
2. breaches relating to debt recovery;
3. breaches relating to the opening, closure, and management of consumer accounts;
4. breaches relating to the updating of consumer information;
5. breaches relating to mechanisms strengthening consumer confidence;
6. breaches relating to digital financial services;
7. breaches relating to transparency in the offering of financial products and services;
8. breaches relating to business conduct;
9. breaches relating to the pricing of products and services;
10. breaches relating to marketing and advertising;
11. breaches relating to the handling of complaints and appeals;
12. breaches relating to complaint handling procedures;
13. breaches relating to the maintenance of registers and reports on complaints.
    The breaches, corresponding regulatory provisions, and sanctions are recorded in the matrix attached to this circular.

Article 3: Procedure for Applying Sanctions
To ensure progressive application of sanctions and give financial products and services providers the opportunity to implement appropriate corrective measures, the BRB follows the following procedure:

1. upon finding a breach or infraction, the BRB sends an explanation request to the financial products and services provider;
2. in case of a breach or infraction requiring immediate regularization, and if the provided explanation is deemed unsatisfactory, the BRB issues an injunction with a deadline beyond which a sanction may be imposed;
3. in case of a breach or infraction requiring complex corrective measures, the BRB may grant the financial products and services provider a deadline for implementation. Otherwise, it issues an injunction with a deadline beyond which a sanction may be imposed;
   In case of a breach or infraction involving an Executive/Manager, the same procedure applies: an explanation request followed by an injunction/warning constituting a final warning is issued before imposing a sanction.

Article 4: Sanctions for Serious Cases
Notwithstanding the procedure described in Article 3 of this circular, for cases deemed serious, the BRB may directly apply sanctions after an explanation request whose response is unsatisfactory or after hearing the concerned Executive/Manager.

Article 5: Payment Method for Penalties
In case of monetary sanctions, the corresponding amounts are either immediately settled by automatic debit from the financial products and services provider's account held at the BRB, or paid into a dedicated account opened at the BRB for those without accounts held by it. In case of monetary sanctions subject to restitution to the consumer, the corresponding amounts are immediately paid into the account indicated by said consumer.

Article 6: Damages and Interest
The sanctions imposed by the BRB on the financial products and services provider do not prevent the consumer from bringing an action for damages and interest, regarding any potential harm suffered, before the competent courts.

Article 7: Entry into Force
This circular enters into force on the day of its publication on the BRB website and in the Official Gazette of Burundi.
Done at Bujumbura, on 29/05/2020
Signed,
Jean CIZA
Governor.

ANNEX TO CIRCULAR NO. 01/2020 ON THE SANCTIONS MATRIX APPLICABLE TO FINANCIAL PRODUCTS AND SERVICES PROVIDERS, ISSUED PURSUANT TO REGULATION NO. 001/2019 ON CONSUMER PROTECTION FOR FINANCIAL PRODUCTS AND SERVICES

I. BREACHES RELATING TO FAIRNESS IN THE OFFERING OF FINANCIAL PRODUCTS AND SERVICES
Art. 4, 5, 6, 7 and 8 | SANCTIONS

1. Unfair and/or dishonest treatment of the consumer | Art. 4 and 5 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital
2. Unprofessional treatment of the consumer | Art. 6 and 7 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital
   Absence of a consumer analysis sheet | Art. 7 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Contribution to consumer over-indebtedness | Art. 8 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital

II. BREACHES RELATING TO DEBT RECOVERY
Art. 9, 10, 11, 12 and 13
Non-immediate restitution to the consumer of funds retained as collateral after normal settlement of the debt | Art. 9 | Disciplinary sanctions on Executives and immediate restitution to the consumer of the collateral amount Non-notification to the consumer, within regulatory deadlines, of the sale or transfer of the portfolio to another financial products and services provider | Art. 9 | Disciplinary sanctions on Executives and/or monetary sanction of 5% of the amount of the sold or transferred portfolio, not exceeding 0.25% of the mandatory minimum capital Failure to immediately inform the consumer about debt recovery through withdrawal from their other accounts held with the creditor | Art. 10 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Debt recovery from a third party who did not sign the guarantee contract in favor of the consumer | Art. 10 | Disciplinary sanctions on Executives and immediate restitution of the unduly recovered amount Non-compliance with procedures for implementing guarantees (aval) | Art. 11 | Disciplinary sanctions on Executives; and/or monetary sanction of 0.25% of the mandatory minimum capital
2. Non-compliance with procedures for realizing mortgage guarantees | Art. 12 and 13 | Disciplinary sanctions on Executives; and/or cancellation of the realization measure of mortgage guarantees unless otherwise decided by other competent authorities; and/or monetary sanction of 0.25% of the mandatory minimum capital

III. BREACHES RELATING TO THE OPENING, CLOSURE, AND MANAGEMENT OF CONSUMER ACCOUNTS
Art. 14, 15, 16 and 17
Incomplete identification of the consumer leading to potential confusion among consumers | Art. 14 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Non-compliance with directives on issuing account statements | Art. 15 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Deduction of account maintenance fees on a dormant account with a zero balance and no outstanding credit by the consumer | Art. 15 | Disciplinary sanctions on Executives and/or monetary sanction of 0.05% of the mandatory minimum capital; and/or account regularization Non-compliance with directives on closing a consumer's account | Art. 16 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital; and/or account re-opening, if applicable, upon client request Charging fees or commissions for free services | Art. 17 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital; and/or immediate restitution of the amount paid by the consumer for the service

IV. BREACHES RELATING TO THE UPDATING OF CONSUMER INFORMATION
Art. 18
Failure to update consumer information at least annually | Art. 18 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital

V. BREACHES RELATING TO MECHANISMS STRENGTHENING CONSUMER CONFIDENCE
Art. 19, 20, 21, 22 and 23
Interruption of ATM services or other automatic financial service channels for reasons other than maintenance services or an emergency beyond the provider's control | Art. 19 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Failure to inform about ATM maintenance periods, indications of other ATMs in service, and contact phone numbers for more information | Art. 19 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital
3. Failure to inform about available alternatives in case of operating system discontinuity | Art. 20 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital
Failure to inform the Central Bank, within regulatory deadlines, in case of operating system failure | Art. 21 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Failure in protecting and ensuring confidentiality of consumer data and transactions | Art. 22 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Lack of physical infrastructure ensuring consumer confidentiality and security during withdrawals at counters and ATMs | Art. 22 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Failure to display security advice countering possible fraudulent practices | Art. 23 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Absence of a 24/7 telephone communication service | Art. 23 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital

VI. BREACHES RELATING TO DIGITAL FINANCIAL SERVICES
Art. 24, 25 and 26
4. Failure to repair a loss incurred by the consumer due to online service control system failure | Art. 24 | Disciplinary sanctions on Executives and restitution to the client of the loss incurred due to online service control system failure
5. Failure to inform the consumer, via electronic messages, about all transactions carried out on their account in real time | Art. 24 | Disciplinary sanctions on Executives and/or monetary sanction of BIF 20,000 per transaction
6. Absence of clear directives on error and fraud resolution procedures | Art. 24 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital
7. Issuance and delivery of a bank card to an unauthorized person | Art. 25 | Disciplinary sanctions on Executives and/or monetary sanction of BIF 500,000 per case
8. Failure to inform the consumer about fraudulent transactions | Art. 25 | Disciplinary sanctions on Executives and/or immediate restitution of the fraud-affected amount
9. Merchants imposing additional fees and commissions for credit card payments | Art. 25 | Disciplinary sanctions on Executives and/or immediate restitution of the amount corresponding to additional fees paid

VII. BREACHES RELATING TO TRANSPARENCY IN THE OFFERING OF FINANCIAL PRODUCTS AND SERVICES
Art. 27 and 31
Failure to provide the consumer with a document containing key information on the chosen financial product/service | Art. 27 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Failure to give the consumer a copy of the terms and conditions related to the chosen financial product/service | Art. 27 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Failure to notify, within regulatory deadlines, changes made to the terms and conditions of financial products and services offerings as well as applied fees and commissions | Art. 31 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Failure to notify, within regulatory deadlines, the cessation of a financial product/service offering | Art. 31 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Failure to notify, within regulatory deadlines, the relocation of premises | Art. 31 | Disciplinary sanctions on Executives and/or monetary sanction of 0.5% of the mandatory minimum capital

VIII. BREACHES RELATING TO BUSINESS CONDUCT
Art. 32, 33 and 34
Use of non-updated contract forms | Art. 32 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Failure to include a clause clearly indicating the circumstances under which early repayment may be effected and the calculation methodology for penalties and their justification | Art. 32 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Charging penalties related to early credit repayment in the absence of an express clause regarding it in the relevant contract | Art. 32 | Disciplinary sanctions on Executives and/or restitution of the penalty amount

1. Failure to display all information concerning conditions applicable to financial products and services in accordance with the form in Annex 1 of Regulation No. 001/2019 on consumer protection for financial products and services | Art. 33 | Disciplinary sanctions on Executives and/or monetary sanction of 0.5% of the mandatory minimum capital
2. Failure to display additional information on the same form in Annex 1 of Regulation No. 001/2019 on consumer protection for financial products and services | Art. 33 | Disciplinary sanctions on Executives and/or monetary sanction of 0.5% of the mandatory minimum capital
   Failure to publish, at least in Kirundi and French, by display and other means, information relating to financial products and services | Art. 33 | Disciplinary sanctions on Executives and/or monetary sanction of 0.5% of the mandatory minimum capital Failure to communicate, to the Central Bank, the conditions applied to financial products and services | Art. 33 | Disciplinary sanctions on Executives and/or monetary sanction of 0.5% of the mandatory minimum capital Failure to communicate, to the Central Bank, within regulatory deadlines, changes in conditions applied to financial products and services | Art. 33 | Disciplinary sanctions on Executives and/or monetary sanction of BIF 30,000 per day of delay, not exceeding 0.5% of the mandatory minimum capital Failure to translate all mandatory documents into Kirundi | Art. 34 | Disciplinary sanctions on Executives and/or monetary sanction of 0.5% of the mandatory minimum capital

IX. BREACHES RELATING TO THE PRICING OF PRODUCTS AND SERVICES
Art. 35, 36, 37 and 38
Effective interest rate exceeding the usury rate set by the Central Bank | Art. 35 | Disciplinary sanctions on Executives and/or monetary sanction of 0.5% of the mandatory minimum capital; and/or reimbursement of unduly collected interest Failure to provide consumers with the fee/commission schedule and calculation basis | Art. 36 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Non-compliance with the rule on interest capitalization | Art. 37 | Disciplinary sanctions on Executives and/or monetary sanction of 0.5% of the mandatory minimum capital; and/or regularization of the situation and/or, if applicable, reimbursement of unduly collected interest Failure to inform consumers monthly about interests, fees, or charges debited from their accounts | Art. 37 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital

X. BREACHES RELATING TO MARKETING AND ADVERTISING
Art. 39 and 40
Failure to indicate the name, logo, paid-up social capital, and contact details on marketing and advertising documents | Art. 39 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Misleading advertising | Art. 39 | Disciplinary sanctions on Executives and/or monetary sanction of 0.5% of the mandatory minimum capital; and/or prohibition of the marketing and advertising activity Ambiguity and exaggeration in the presentation and content of marketing and advertising documents | Art. 40 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Use of complicated language and terms in the presentation and content of marketing and advertising documents | Art. 40 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Use of marketing and advertising documents with font size less than 12 points | Art. 40 | Disciplinary sanctions on Executives and/or monetary sanction of BIF 20,000 per displayed document

XI. BREACHES RELATING TO THE HANDLING OF COMPLAINTS AND APPEALS
Art. 41 and 43
Absence of a consumer complaint handling procedure manual | Art. 41 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Failure to display, in a visible and accessible place to the public, a notice explaining consumer complaint procedures and modalities | Art. 41 | Disciplinary sanctions on Executives and/or monetary sanction of BIF 500,000 Charging fees and commissions to the consumer for depositing, processing, and resolving their complaints | Art. 43 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital; and/or immediate restitution of the unduly paid amount

XII. BREACHES RELATING TO COMPLAINT HANDLING PROCEDURES
Art. 44, 45, 46 and 47
Absence of a dedicated service for handling consumer complaints directed by a competent executive | Art. 44 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Failure to have a document designating an employee responsible for receiving and handling consumer complaints at the agency and counter levels | Art. 44 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Failure to acknowledge in writing the receipt of a complaint | Art. 45 | Disciplinary sanctions on Executives and/or monetary sanction of BIF 50,000 per complaint Failure to notify the complainant in writing of the decision taken and its reasoning, with a mention indicating that the complainant may appeal to the Central Bank | Art. 45 | Disciplinary sanctions on Executives and/or monetary sanction of BIF 100,000 per complaint Failure to promptly execute any corrective measure taken regarding the complainant | Art. 45 | Disciplinary sanctions on Executives; and/or monetary sanction of 0.25% of the mandatory minimum capital Violation of regulatory deadlines in settling complaints | Art. 46 | Disciplinary sanctions on Executives and/or monetary sanction of BIF 50,000 per day of delay Violation of regulatory deadlines in communicating decisions taken | Art. 46 | Disciplinary sanctions on Executives and/or monetary sanction of BIF 50,000 per day of delay Failure to display, in a visible and accessible place to the public, complaint settlement procedures | Art. 47 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Failure to display, in a visible and accessible place to the public, complaint settlement procedures, at least in Kirundi, French, and English | Art. 47 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Display of documents detailing complaint settlement procedures written in a font size less than 12 points | Art. 47 | Disciplinary sanctions on Executives and/or monetary sanction of BIF 500,000

XIII. BREACHES RELATING TO THE MAINTENANCE OF REGISTERS AND REPORTS ON COMPLAINTS
Art. 48, 49, 50 and 51
Failure to keep the register and electronic file of all complaints up to date | Art. 48 | Disciplinary sanctions on Executives and/or monetary sanction of 0.25% of the mandatory minimum capital Absence of a register of all consumer complaints and omissions