By Dr Goodluck Temu

The Bank of Tanzania has issued “Guidelines on Fees and Charges for Banks and Financial Institutions 2024” to provide a comprehensive framework for the imposition of fees and charges on financial products and services offered by banks and financial institutions.

Here is a summary of the key points:

  • Objectives: The guidelines are developed to ensure the integrity and stability of the financial system, balancing business sustainability and consumer protection. They aim to foster competition and innovation while contributing to financial inclusion. Issued under Regulation 25(1) of the Bank of Tanzania (Financial Consumer Protection) Regulations, 2019, the Guideliness are applicable and binding to all banks and financial institutions in Tanzania. It is expected that the Guidelines will ensure fair and equitable imposition of fees and charges, deter unfair practices, promote competition, spur innovation, and enhance access to financial services.
  • Governance and Internal Controls: The Guideliness requre Banks and financial institutions to establish adequate governance arrangements for managing fees and charges. Relevant Board of Directors will be responsible for approving and periodically reviewing strategies and policies for fees and charges, setting roles and responsibilities, and ensuring fairness. On the other hand, senior management is tasked with implementing board strategies and policies, managing the fee and charge structure, and ensuring compliance.
  • Fees and Charges: Banks must provide fees that are reasonable and affordable, especially for electronic transactions. There is a prohibition of charging fees on certain internal processes and basic services, such as the first electronic bank statement each month, are prohibited. Additionally, banks and financial institutions are required to offer reasonable fees for electronic transactions, including merchant payments and bank transfers. It is also required that fees reflect actual costs and not be bundled under vague headings.
  • Transparency: Banks must disclose all fees and charges, especially those related to electronic transactions, before consumers confirm transactions. Specific attention is given to loan facilities, in which transparency on associated fees is emphasized.
  • Sanctions and Penalties: Noncompliance has severe penalties. Administration sanctions, for example, include operations suspension, service withdrawal, management staff suspension, and other measures. In addition, penalties of up to twenty million Tanzanian shillings for noncompliance apply to directors, executives, and staff.

These Guidelines come at an appropriate moment as the offering of financial services expands. They are expected to play an important role in ensuring that financial service consumers are protected, especially as the country works to increase financial inclusion and formalise financial services.

This and other guidelines can be found on the BoT website here.

Disclaimer

This article is not intended to replace professional advice. No one should rely exclusively on the information provided as a substitute for seeking professional advice. The writers or the Firm are not liable for any use of the information contained herein and do not guarantee the accuracy of its contents from the date of publication to the date of usage. For contact: temu@africorp.co.tz

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Dar es Salaam, Tanzania