Regulation No. 001/2019 on the Protection of Consumers of Financial Products and Services

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[Logo: BRB - BANQUE DE LA REPUBLIQUE DU BURUNDI]

BANQUE DE LA REPUBLIQUE DU BURUNDI

REGULATION NO. 001/2019 ON THE PROTECTION OF CONSUMERS OF FINANCIAL PRODUCTS AND SERVICES

STATEMENT OF REASONS

The ever-growing complexity and diversity of the range of products and services offered by financial product and service providers in Burundi require increased protection for consumers of these services.

Indeed, in the offering of financial products and services by providers, the Banque de la République du Burundi is well aware that risks of fraud, abuse, and misconduct cannot be ruled out, to the detriment of consumers, especially those who are ill-informed or unaware of their rights and duties.

Thus, the establishment of a framework for the protection of consumers of financial products and services strengthens the knowledge and fundamental rights of these consumers, constitutes an important source of discipline in the financial sector, and stimulates competition by encouraging financial product and service providers to offer better products and services to a market of informed consumers.

The existence of a regulatory framework for consumer protection is a fundamental asset for increasing access to, use of, and quality of financial products and services, and contributes to the solidity of the financial sector. The protection of consumers of financial products and services is a precursor to strengthening confidence in the financial sector and contributes to the promotion of financial inclusion. Moreover, consumer protection ensures that the benefits derived from increased access to formal financial products and services accrue to both consumers and the country's economy as a whole.

Consumer protection efforts aim to harmonize the conditions applicable to financial product and service providers in their relations with existing and potential clients.

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Being confident that, without a doubt, the adoption of good consumer protection practices positively influences the financial sector, the Central Bank enacts this Regulation, with the aim of protecting consumers of financial products and services and thereby ensuring confidence in the financial sector of Burundi, in accordance with the missions assigned to it and the powers delegated to it, as stipulated by Article 7 of Law No. 1/34 of December 2, 2008, establishing the Statutes of the Banque de la République du Burundi. Furthermore, this Regulation refers to the provisions of Law No. 1/17 of August 22, 2017, governing banking activities, which stipulates, notably in its Article 17, that upon the approval of a company, the Central Bank "also assesses the aptitude of the applicant company to conduct its activities within a secure framework. The applicant company must notably equip itself with appropriate means compatible with the proper functioning of the banking system and the payment system in Burundi, which ensure satisfactory protection for the clientele."

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[Logo: BRB - BANQUE DE LA REPUBLIQUE DU BURUNDI]

BANQUE DE LA REPUBLIQUE DU BURUNDI

REGULATION NO. 001/2019 ON THE PROTECTION OF CONSUMERS OF FINANCIAL PRODUCTS AND SERVICES

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TABLE OF CONTENTS
CHAPTER I: SCOPE, OBJECT, AND DEFINITIONS ............. 1
CHAPTER II: OBLIGATIONS OF FINANCIAL PRODUCT AND SERVICE PROVIDERS ................................................................................................. 3
SECTION 1: FAIRNESS IN THE OFFERING OF FINANCIAL PRODUCTS AND SERVICES ................................................................................................................. 3
SUB-SECTION 1: GENERAL REQUIREMENTS ................................................. 3
SUB-SECTION 2: DEBT COLLECTION ......................................... 4
SUB-SECTION 3: OPENING, CLOSING, AND MANAGEMENT OF CUSTOMER ACCOUNTS ........................................................................................................ 6
SECTION 2: RELIABILITY OF FINANCIAL PRODUCTS AND SERVICES ............... 7
SUB-SECTION 1: UPDATING CUSTOMER INFORMATION ......... 7
SUB-SECTION 2: MECHANISMS FOR STRENGTHENING CONSUMER CONFIDENCE ..................................................................................... 8
SUB-SECTION 3: DIGITAL FINANCIAL SERVICES.......................... 10
SECTION 3: TRANSPARENCY IN THE OFFERING OF FINANCIAL PRODUCTS AND SERVICES ....................................................................................................... 11
SUB-SECTION 1: INFORMATION AND ADVICE TO CONSUMERS ........................................................................................................................... 11
SUB-SECTION 2: BUSINESS CONDUCT ............................................. 12
SUB-SECTION 3: PRICING OF PRODUCTS AND SERVICES ............... 14
SUB-SECTION 4: MARKETING AND ADVERTISEMENTS ......................................... 14
CHAPTER III: HANDLING OF COMPLAINTS AND REMEDIES ........................ 15
SECTION 1: GENERALITIES ............................................................................ 15
SECTION 2: COMPLAINT HANDLING PROCEDURES ..................... 16
SECTION 3: MAINTENANCE OF RECORDS AND REPORTS ON COMPLAINTS .... 17
CHAPTER IV: FINAL PROVISIONS ....................................................... 18

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Having regard to Law No. 1/34 of December 2, 2008, establishing the Statutes of the Banque de la République du Burundi; Having regard to Law No. 1/17 of August 22, 2017, governing banking activities; Having regard to Law No. 1/02 of February 4, 2008, on the fight against money laundering and the financing of terrorism; Having regard to Law No. 1/09 of May 30, 2011, on the Code of Private and Publicly Participated Companies; Having regard to Law No. 1/01 of January 16, 2015, revising Law No. 1/17 of April 26, 2010, on the Commercial Code; Having regard to Law No. 1/01 of January 5, 2016, revising Decree-Law No. 1/41 of July 9, 1993, defining credit-leasing operations and provisions applicable to the credit-leasing contract and regulating the conditions for exercising these activities; Having regard to Law No. 1/10 of August 12, 2016, governing conventional movable securities in Burundi; Having regard to Law No. 1/07 of May 11, 2018, on the national payment system; Having regard to Regulation No. 001/2018 on microfinance activities in Burundi; Having regard to Regulation No. 001/2017 on payment services and the activities of payment institutions; Having regard to Regulation No. 002/2017 on Commercial Agents in banking and payment services operations; Having regard to Exchange Regulations;

The Banque de la République du Burundi enacts this Regulation.

CHAPTER I: SCOPE, OBJECT, AND DEFINITIONS

Article 1: Scope

The provisions of this Regulation apply to:

any provider of financial products and services approved by the Banque de la République du Burundi;
any Agent of a financial product and service provider registered with the Banque de la République du Burundi.

Article 2: Object

The object of this Regulation is to:

promote good practices of financial product and service providers by establishing minimum consumer protection standards;
promote financial education and increase transparency to enable consumers of financial products and services to make informed decisions in their relations with providers of said products and services;
strengthen confidence in the financial sector by ensuring that financial product and service providers offer quality products and services meeting consumer needs;
encourage financial product and service providers to establish effective mechanisms for handling consumer complaints related to the offering of financial products and services.

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Article 3: Definitions

For the purposes of this Regulation, the following terms are defined as:

Agent: Commercial agent as defined in Law No. 1/17 of August 22, 2017, governing banking activities.
Central Bank: Banque de la République du Burundi.
Bank Card: card used for:
- withdrawing cash and obtaining other services from an automated teller machine (ATM);
- paying for goods and services;
- withdrawing or depositing cash into a bank account via an Agent.
Dormant Account: a current account with no activity for a period of six (6) months.
Consumer: any natural or legal person who uses, has used, or intends to use one or more products or services offered by financial product and service providers and their Agents.
Total Cost of Credit: the total cost paid by the credit applicant, calculated by adding all fees and commissions payable upon the establishment of the credit and during the repayment period. It is the total amount the borrower must repay minus the principal amount borrowed.
Financial Product and Service Provider: any bank, financial institution, microfinance institution, exchange bureau, payment institution approved by the Banque de la République du Burundi, as well as the National Post Office for financial products and services.
Personal Identification Number (PIN): a password or any other secret code used by a cardholder to access financial services.
Complaint: any written expression of dissatisfaction by a consumer regarding the services provided by financial product and service providers and their Agents.
Advertisement: any form of public communication intended to invite or incite, directly or indirectly, a person to purchase or acquire a financial product or service.

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CHAPTER II: OBLIGATIONS OF FINANCIAL PRODUCT AND SERVICE PROVIDERS

SECTION 1: FAIRNESS IN THE OFFERING OF FINANCIAL PRODUCTS AND SERVICES

SUB-SECTION 1: GENERAL REQUIREMENTS

Article 4: Fair and Honest Treatment of Consumers

The financial product and service provider and its Agents must treat their clients fairly at all levels of their relations. They must act with honesty and integrity in their relations with consumers and offer them products and services in a manner that strengthens their confidence in the sector.

Article 5: Prohibitions

The financial product and service provider and its Agents must not:

a) engage in unfair, deceptive, or aggressive practices such as threatening, intimidating, assaulting, abusing, or humiliating a consumer; b) offer, accept, or demand bribes or other "gifts". The term "gifts" does not include promotional donations or materials provided to consumers in general, or to one or more specific categories of consumers; c) discriminate against a consumer based on sex, race, color, ethnic origin, tribe, place of birth, belief or religion, social status, political opinion, or disability; d) conclude a financial transaction with a consumer without ensuring that they fully understand the nature of the proposed transaction; e) include an abusive or fraudulent clause in a contract with the consumer; g) disguise, minimize, obscure, or conceal an important fact, advertisement, or warning through, among other means:
(i) the use of printing with a font size smaller than 12 points; (ii) the description of an important fact, advertisement, or warning in complicated language; (iii) the omission of an important fact or warning.

Article 6: Responsibility Towards Consumers

The financial product and service provider is responsible towards consumers and must treat them professionally. It must train, sensitize, and encourage its employees to provide appropriate welcome to clients and guarantee them prompt service.

Article 7: Professional Services

For the purposes of Article 6, a financial product and service provider is deemed to have lacked professionalism in its services if:

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a) it has taken no measures to:
(i) correctly identify consumers to avoid risks of confusion; (ii) assess the consumer's general understanding and appreciation of their rights and obligations related to a financing agreement, as well as the risks and costs arising from the contract; (iii) have an accurate idea of the consumer's credit repayment history; (iv) assess the consumer's indebtedness status; (v) assess the consumer's financial solidity. b) after having assessed the consumer, it concluded the credit agreement with the consumer despite information indicating that:
(i) the consumer did not understand or appreciate the risks, costs, or obligations arising from the proposed credit contract; (ii) concluding this credit agreement would render the consumer over-indebted; (iii) there is no assurance that the activity for which the credit is requested can be conducted successfully. c) after the establishment of the credit, the financial product and service provider does not monitor the use of the granted credit and its recovery; d) there are several reasonable complaints registered against it regarding the quality of the financial products and services offered.

The financial product and service provider must design and complete an analysis sheet allowing it to address the elements mentioned in paragraph a) of this Article.

Article 8: Consumer Over-Indebtedness

a) In the procedure for granting a credit or any other type of financial facility to a consumer, the financial product and service provider must ensure that it does not lead the consumer into a situation of over-indebtedness. b) A consumer is deemed over-indebted if, at the time of determining the amount of credit to be granted to them, there is information indicating that they are or will be unable to meet all their obligations arising from the various credit contracts to which they are a party, taking into account their financial means and obligations.

SUB-SECTION 2: DEBT COLLECTION

Article 9: Collection Procedures

a) Before signing the contract, the financial product and service provider must inform the consumer about the conditions under which the credit is subject to collection procedures. It must not use unfair or abusive credit collection practices against debtors. b) Funds held as pledge to guarantee the repayment of a credit must be returned to the consumer immediately after the normal settlement of the debt.

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c) In the event of the sale or transfer of the credit portfolio to another financial product and service provider, the selling financial product and service provider must notify the consumers in writing, at least thirty (30) working days in advance. This notification must provide adequate information on the purchaser, its contacts, the place for repayment installments, and the consequences of non-repayment. It must also inform consumers that they remain indebted and that the repayment conditions remain unchanged. d) The selling financial product and service provider must agree with the purchaser that the debtors' agreements with the institution remain unchanged.

Article 10: Recovery

a) If the consumer is unable to repay a loan, the financial product and service provider has the right to take measures to recover the amount due from this consumer, in accordance with the laws and regulations in this matter. b) The financial product and service provider:
(i) may only claim from the consumer fees and expenses actually incurred; (ii) must provide the consumer with a detailed breakdown of the fees and expenses incurred; (iii) may offset the unpaid amount with a credit balance in one or more other accounts opened in the consumer's name in its books and must immediately inform the consumer at their most recent address available to it; (iv) must not recover its debt from a third party, including the consumer's guardian, a family member or friend, or an association of which the consumer is a member, if the third party in question has not signed the guarantee contract in favor of the consumer.

Article 11: Implementation of Guarantee (Aval)

The guarantor (avaliseur) must be notified immediately upon the first payment default and warned of the implementation of the guarantee upon the third payment default.

Article 12: Realization of Mortgage Guarantees by the Debtor

In the event of non-repayment or misappropriation of credit, the mortgaged debtor is required, within a period of one year at the latest, from the first formal notice, to sell, on their own behalf, the mortgaged property to satisfy the creditor with the proceeds of the sale.

Article 13: Realization of Mortgage Guarantee at the Creditor's Request

Failing sale by the debtor themselves within the time limits indicated in Article 12 of this Regulation, the creditor may submit a request for public sale of the mortgaged property to the President of the Commercial Court, who, by order, shall seize the Director of Land Titles within one month, from the date of the request, for the purpose of organizing a public sale. In this case, the creditor cannot become the purchaser of the mortgaged property, unless the offered price is lower than the value of the appraisal established at the time of granting the credit.

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SUB-SECTION 3: OPENING, CLOSING, AND MANAGEMENT OF CONSUMER ACCOUNTS

Article 14: Account Opening

a) Before opening an account for a consumer, the financial product and service provider must inform the consumer of the rights and duties related thereto. These include the following information:
(i) the types of accounts and their operating modalities, as well as the required documents; (ii) the normal time required to regularize a check or other payment instrument for debit/credit to an account; (iii) the minimum amount required for opening and the minimum balance required, as well as the fees to be paid if the balance falls below the recommended minimum; (iv) the treatment of dormant accounts; (v) the credit interest rate, if it is a deposit account; (vi) the frequency of account statements and any associated fees; (vii) account maintenance fees and their due dates; (viii) the conditions and fees for closing an account at the consumer's initiative; (ix) the conditions for closing an account at the initiative of the financial product and service provider. b) The financial product and service provider must ask the consumer to provide all necessary elements for identification to avoid risks of consumer confusion. c) The financial product and service provider must ask the consumer to provide necessary information on appropriate communication channels (postal, electronic, at the provider's location, etc.). d) The level of information to be collected on the consumer must be proportional to the nature and complexity of the product or service sought by the consumer but must be sufficient to allow the financial product and service provider to offer the service professionally.

Article 15: Account Management

a) The financial product and service provider must assist the consumer in managing their accounts and verifying transactions made therein. To this end, it must regularly provide account statements to the consumer within a period not exceeding one month, through appropriate channels, notably email or mobile phone, provided that the consumer has provided their email address and/or telephone number to the financial product and service provider. b) The account statement must include at least the following information:
(i) the opening balance;
(ii) all movements made on the account and their descriptions; (iii) all interest credited/debited to the account; (iv) all fees and commissions; (v) the closing balance.

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c) Account maintenance fees on a dormant account cease to be charged once the account balance is zero and the consumer has no ongoing credit.

Article 16: Account Closure

a) The financial product and service provider must inform the consumer intending to close an account they no longer need about the procedures to follow and the financial implications thereof. b) Without prejudice to legal provisions regarding the closure of accounts and abandoned funds, it is prohibited for the financial product and service provider to close a consumer's account without having given written notice, with acknowledgment of receipt, to their last known contacts, at least fifteen (15) working days in advance, from the date of receipt of this notification, unless:
(i) the financial product and service provider is obliged by law; (ii) the account has not been active for a period of more than ten (10) years and the consumer is unreachable by the financial product and service provider; (iii) the account balance is considered abandoned funds and must be treated as such, in accordance with current laws. c) The financial product and service provider must inform the consumer about the implications of non-use of an account and those of its closure.

Article 17: Free Services

The financial product and service provider must offer consumers the following services, without charging fees or commissions:
- account opening;
- account closure;
- account status.
In addition to the aforementioned financial services, the financial product and service provider may establish other financial services to be provided to consumers free of charge.

SECTION 2: RELIABILITY OF FINANCIAL PRODUCTS AND SERVICES SUB-SECTION 1: UPDATING CONSUMER INFORMATION

Article 18: Registration of Consumer Information

a) The financial product and service provider must keep updated information on each consumer, which must contain, at a minimum:
(i) all documents necessary for the identification of the consumer; (ii) the consumer's address, telephone number, and other detailed contacts; (iii) all documents and forms of the ---

Regulation No. 001/2019 on the Protection of Consumers of Financial Products and Services

Lineage: In force