The Bank of Tanzania (BOT) has issued amendments to the Financial Consumer Protection Regulations, 2019, aiming to strengthen consumer protection and enhance transparency in financial services. Below are the main highlights of the 2025 amendments:
1. Expanded Scope and Definitions
- The regulations now apply to all financial service providers licensed or supervised by the BOT, except where otherwise prescribed.
- Definition changes include:
- “Dormant account” period extended from 5 to 12 months.
- Introduction of a new category: “Inactive account” accounts unused for more than 5 months.
- Inclusion of the High Court of Zanzibar within the definition of "Court".
2. Prohibition of Certain Charges
- Financial service providers are prohibited from imposing:
- Interest rate hikes or non-disclosed late payment penalties on existing financing balances.
- Maintenance fees on dormant and inactive accounts.
- Introduction of clear guidelines against abusive debt recovery, including unlawful collections, false statements, harassment, or coercion.
3. Interest Calculation Method
- Mandatory use of the reducing balance method for calculating interest on loans.
4. Consumer Access and Literacy Programs
- Providers must implement programs promoting access to financial products for underserved populations.
- Financial literacy must be included in strategic plans, with clear action plans identifying target market segments, messages, channels, and responsible persons.
- Financial education must be delivered by certified educators from accredited institutions.
5. Clarity and Language of Agreements
- Technical terms in agreements are restricted unless absolutely necessary and must be clearly explained.
- Agreements must be in English or Kiswahili, according to the consumer’s preference.
6. Disclosure and Approval of Fees and Charges
- All fees, charges, interest rates, profits, or returns must be fully disclosed prior to any transaction.
- New or increased fees require prior written approval from the BOT.
- The BOT may prohibit fees or charges to protect consumers or ensure market fairness.
7. Consumer Asset Protection
- Financial service providers are liable for losses due to fraud, scams, or misuse of consumer assets.
- Providers must promptly refund consumers for such losses unless caused by consumer negligence or fraud.
- They must take disciplinary action against responsible employees and notify the BOT accordingly.
8. Data Protection
- Financial service providers must protect consumer financial and personal information in accordance with the Personal Data Protection Act.
9. Consumer Complaint Handling
- Complaint resolution timeframes are clarified, with maximum periods set (e.g., 12 hours for mobile money payments, 14 days for credit facilities).
- The BOT has enhanced enforcement powers, including imposing fines (TSh 1 million per day) for non-compliance with its decisions.
- Consumers dissatisfied with provider decisions may escalate complaints to the BOT for review.
10. Publication and Transparency
- Interest rates, fees, charges, profits, and related costs must be published quarterly in Kiswahili and English newspapers and on provider websites within five working days.
Practical Implications
- Financial service providers must review and update their compliance frameworks and operational policies to align with the amended regulations.
- Clear communication, transparency in fees and charges, and consumer education will be critical to meet new regulatory expectations.
- Providers must enhance their internal controls on fraud prevention and complaint handling to avoid liability and penalties.