On Thursday, July 26 2018, the State Bank of Pakistan issued guidelines on ‘Prohibited Banking Conduct’ that are applicable on all Banks, MFBs and DFIs.

The guidelines have been issued in order to ensure that consumers are not provided with any misleading or deceptive information in connection with a service or product and aim to prevent unreasonable business practices that intimidate or exploit consumers.

In that regard, they are meant to prevent all business practices that restrict the freedom of consumers to choose between services or product available to them and prevent any collusive business practices that may result in unfavourable outcomes to consumers.

As per the guidelines, Banks have been barred from engaging in misleading or deceptive conducts and will have to meet explicit instructions issued by the SBP on product suitability, product transparency and disclosure, sales, post sales services, grievance handling and consumer empowerment.

To ascertain whether any bank is engaging in misleading or deceptive conduct, SBP will also consider the circumstances in which the alleged misconduct occurred, for example by making sure whether it was appropriate on the part of the bank to communicate to consumers a level of financial knowledge that might not have been comprehendible for them.

Banks have also been barred from exerting undue pressure or influence that involves exploiting their position of power to limit a consumer’s ability to make an informed decision, such as through excessive contact despite consumer’s refusal.

In addition to that, banks will not be able to demand payments for unsolicited services that are provided to consumers without their request or consent.

With regard to collusion, banks have been strictly prohibited from fixing features or terms to the detriment of banking consumers such as through implicit or explicit agreements between banks to manipulate ethical or compliance requirements, such as through the sharing of consumer information for marketing purpose without the consent of the consumer.

“Banks will be considered complacent if they are found least interested in taking the necessary action to ensure a responsible banking conduct,” warned the State Bank of Pakistan.

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