Ghana’s financial sector is facing a crisis of trust as a wave of fraud incidents erodes public confidence in banks and mobile money operators. Lord Ibrahim Sani, a prominent Ghanaian businessman, is advocating for significant reforms to protect consumers from bearing the brunt of losses due to systemic weaknesses and security breaches within these institutions. He argues that the current system, where customers are often left without recourse after unauthorized transactions deplete their accounts, is unacceptable and reflects a dangerous culture of non-accountability. Lord Sani insists that Ghanaian banks should emulate the practices of their counterparts in developed nations like the UK and China, where victims of fraud are promptly reimbursed while investigations are conducted.
Lord Sani’s central argument revolves around the principle of consumer protection and the responsibility of financial institutions to safeguard customer funds. He believes that when fraud occurs due to vulnerabilities within a bank’s system, the bank should be held fully accountable and obligated to refund the affected customer. He highlights the disparity between the treatment of fraud victims in Ghana and those in countries with more robust consumer protection laws, where banks are required to compensate customers for authorized push payment (APP) scams unless gross negligence on the customer’s part is proven. This policy, he notes, has been instrumental in reducing consumer losses and incentivizing banks to prioritize fraud prevention.
The current situation in Ghana, characterized by lengthy “ongoing investigations” that rarely result in customer reimbursement, fosters distrust and undermines the stability of the entire financial system. Lord Sani emphasizes that trust is the bedrock of banking and its erosion poses a significant threat to the economy. He contends that Ghanaian banks, which generate substantial profits, have the financial capacity to insure against fraud and promptly refund victims. Anything less, he argues, is a breach of the fundamental social contract between banks and their customers.
To address this critical issue, Lord Sani proposes a comprehensive overhaul of the existing regulatory framework. He calls for the Bank of Ghana and the Ghana Association of Banks to implement a mandatory reimbursement policy for verified fraud cases, overseen by an independent consumer protection office. Furthermore, he recommends the establishment of a national fraud reimbursement fund, jointly financed by banks and regulated by the state, to ensure that victims are compensated even in cases where individual banks might be unable to cover the losses. This fund would serve as a safety net for consumers and further incentivize banks to invest in robust security measures.
Drawing inspiration from successful models in other countries, Lord Sani suggests that Ghana adopt legislation similar to the UK’s Financial Services Compensation Scheme (FSCS) and Contingent Reimbursement Model Code. These frameworks shift the burden of proof away from the customer, making it easier for victims of fraud to reclaim their funds. He believes that such legislative changes are essential to protect vulnerable consumers and restore confidence in the financial sector. He stresses that the current practice of placing the onus on customers to prove they were not negligent is unfair and often insurmountable, given the sophisticated nature of modern banking fraud.
Lord Sani’s call for reform underscores the urgent need for action to protect Ghanaian consumers and strengthen the integrity of the financial system. He argues that the current laissez-faire approach, where banks are not held accountable for security breaches and customers are left to bear the financial burden of fraud, is unsustainable. By implementing robust consumer protection measures, Ghana can not only safeguard its citizens’ financial well-being but also foster a more stable and trustworthy banking environment. He warns that failure to address these issues will inevitably lead to further erosion of public trust, potentially jeopardizing the stability of the entire financial system. He concludes by emphasizing that banking is fundamentally a relationship built on trust, and if banks fail to uphold their end of the bargain by protecting customer funds, the consequences could be dire.
