…As Investors Lament Excessive Bank Charges
Investors in the Nigerian capital market have expressed mixed feelings over the e-Dividend registration platform being introduced by the Securities and Exchange Commission (SEC). The initiative was borne out of the need to address the perennial challenge of unclaimed dividends which as at end of 2015 stood at N90 billion.
E-dividend refers to the payment of cash dividend into a shareholder’s nominated bank through a direct credit rather than issuing a cheque or warrant. The system automatically allows dividends to be credited directly into shareholders’ accounts within 24 hours of payment by the company.
Consequently, SEC, in collaboration with the Central Bank of Nigeria (CBN) and Nigeria Interbank Settlement System (NIBSS), formally launched the e-Dividend management system in 2015 to enable investors to have direct access to their dividends. SEC officials have, since last year, embarked on series of enlightenment campaigns, including road shows, to draw attention to the need for investors to embrace the e-Dividend system.
The latest was in Nigeria’s business and commercial capital: Led by its top management team, the Commission carried out a public enlightenment programme on e-Dividend registration in Lagos last week. The exercise included a 3-day road show in strategic places and culminated in a town hall meeting at the Mouson Centre. SEC Director-General, MounirGwarzo, disclosed that the exercise was one of the initiatives being implemented by the Commission as part of its 10-year Capital Market Master Plan to encourage retail investors to return to the market and thereby deepen the market.
While the e-Dividend payment system has been commended by some industry experts, a section of the stakeholders have lampooned SEC for introducing the initiative without addressing the challenge of poor and expensive service delivery experienced by customers of deposit money banks (DMBs). They argue that DMBs which constitute a key factor in the implementation of the dividend payment alternative would exploit investors through excessive charges.
Coming at a time bank customers are disenchanted over multiple and excessive bank charges which are not commensurate with the quality of service delivery on the part of the DMBs, concerned stakeholders frown at the e-Dividend initiative being pushed by SEC at this time.
Recently, Consumer Advocacy Foundation of Nigeria (CAFON), a consumer rights Non-Governmental Organisation (NGO), accused the Central Bank of Nigeria (CBN) of aiding banks to exploit their customers. The group’s president, Sola Salako, in a petition to bank customers, made available to the media, condemned the poor and unsatisfactory transactions at the DMBs.
Part of the petition read: “Dear Nigerian Banks Consumers for many years now, consumers of banking services have been subject to series of poor and unsatisfactory transaction and relationship terms. We have endured excessive charges, illegal fees and unfair contracts that only protect the bank but does not protect the consumers.
“Banks debit our accounts at will for charges we never agreed to or were not aware of; they charge us for every little service; we pay for getting our statements; introduction letters; and now, some banks are charging N200 for the use of deposit and transfer forms! “Under the current CBN management, abolished fees are being reintroduced. ATM withdrawals that were free now cost N65 on 3rd withdrawals.
“We pay N1000 for debit card issuance and renewals; we pay N105 for every online transfer; and they still charge N105 as Annual Debit Card Maintenance and now, a new Stamp Duty charge of N50 on every credit of over N1000 has just been introduced. COT that was supposed to end finally in 2016 is now being reintroduced as 1% of every withdrawal purportedly as Monthly Current Account Maintenance Fees! This is unacceptable!
“Our Demands are: We want bank charges reviewed downwards; Banks must clear fees with consumers before debiting our accounts; Bank forms and contracts must be reviewed to include more protection for consumers; Consumer complaints must be resolved promptly and satisfactorily; CBN must review the new Stamp Duty Charge, Account Maintenance Charge and Debit Card Maintenance Fees”.
Investigation by The UNION shows that many investors are not enthusiastic about the e-Dividend system. They argue that it is a means of dragging them into the widening tax net of the Federal Inland Revenue Service (FIRS) which is set out to achieve its N3.9 trillion tax revenue target for 2016 by all means. According to these stakeholders, majority of who are minority shareholders in various companies, the time required to queue in the bank to have the e-Dividend registration processed, is not worth it.
“The dividends I receive are too insignificant for me to go and queue up in the bank for hours. In the end it will be collected by the banks through their multiple charges,” said Anthony Ogbulie, a minority shareholder in three Nigerian quoted companies.
A stakeholder and President, Renaissance Shareholders Association of Nigeria,Olufemi Timothy, told The UNION that nobody would want to go to bank now to process e-Dividend registration because of the prevailing disenchantment among customers over the high charges and poor service delivery by DMBs. “Nobody would want to go to bank now. E-Dividend is dead on arrival (all the same), we are encouraging shareholders to embrace it (because) we can’t do without (the) banks”, Timothy said.
National President, Constance Shareholders Association of Nigeria, ShehuMallamMikail, also gave the knocks on SEC over the e-Dividend initiative, describing it as ill-timed and wrongly implemented. He told The UNION that SEC should have addressed the worrisome bank charges and also allow sufficient time of up to three years, for system to be gradually assimilated by the investing public. He deplored the current pressure on investors to complete the e-Dividend registration before end of February or pay a penalty of N100 for “late” registration.
“The e-Dividend road show embarked up by SEC is a jamboree. How many of those people in the streets have shares in the quoted companies? SEC should have given a time frame of about 3 years to carry out adequate awareness campaign and to test-run the new system. During this period, bank customers would have adjusted to the excessive charges and poor services rendered by the banks,” Mikail said.
Recent investigation by this newspaper showed that many banks are not ready for the e-Dividend registration. Twelve branches of different DMBs visited in Lagos gave various excuses for not attending to the customers. The excuses range from poor network service, crowded banking halls to the absence of the officer in charge. A branch of an old generation bank in Dopemu – Agege on the Lagos-Abeokuta Expressway told this reporter to check back on three different dates without keeping to their promise.
Some customers who spoke to The UNION also expressed dissatisfaction over the banks poor network situation as reason for not carrying out the customers’ request for e-Dividend registration. “I spent almost an hour in the bank without carrying out the e-Dividend registration because the bank said their system was not working efficiently,” a Lagos-based businessman who identified himself as Anthony Nwachukwu, said.
However, a leading Stockbroker and CEO, Sofonix Investment and Communication, Sola Oni, described the e-Dividend management system as timely and capable of addressing the perennial challenge of accumulated unpaid dividend.
“Many investors have suffered untold hardship due to cumbersome method of claiming their dividend. At times, transport cost to the bank is well above the value of net dividend. Banks’ policy on payment of dividend into a savings account does not help matters. These are some of the factors that made unclaimed dividend to grow at exponential rate.
“The advent of e-dividend is expected to address these issues. If an investor does not go through thunderstorm to get his dividend credited, I do not think that banks’ charges would be an impediment. There is time value of money and this is being reinforced by SEC’s promise that dividend can be paid in 24 hours under the new policy structure,” Oni told The UNION Monday.
Meanwhile, CAFON has declared March 1, 2016 a ‘No Banking Day’. The group urges bank customers to shun all banking services on that day to protest excessive bank charges: “We urge all consumers to boycott all banking services in protest of these excessive charges and policies.
“That means on Tuesday March 1, (1) Don’t visit any bank or branches to transact any business. (2) Don’t use your ATM from 12a.m -12 midnight on March 1. (3) Don’t log in to any of your accounts online and don’t do any transfers from 12am-12 midnight. (4) Don’t make any online payments from 12am- 12 midnight. (5) Don’t issue any cheques or banking instruments dated March 1, 2016.
“Avoid doing any financial transactions on March 1; but if you must, avoid the banks!” the group said.