One of the recurring issues with many banks in Nigeria is the issue of excess and illegal bank charges on accounts held by customers. The situation often arises from loan transactions. When you obtain a bank loan, there are a number of charges that it might attract along the way as part of the loan contract. These include interest charges, management fees, facility enhancement fees, restructuring fees, commitment fees, commissions, taxes, e.t.c. The applicability of these charges depends on a number of factors such as the kind of loan facility in question. The rate varies from bank to bank, subject to approved guidelines by the Central Bank of Nigeria (CBN) and market forces.

Given that the mathematical computation of these charges and repayments are controlled by humans, errors are inevitable. This is notwithstanding the fact that electronic computing devices are utilised in the process.

Beyond the possibilities of honest computing errors, banks are known for deliberate act of excess and illegal charges. For instance, in the famous case of Benue Cement Company Plc v. Sky Inspection Nig. Ltd. & Anor. [2002] 17 NWLR (Pt. 795) 80, a financial consulting company (Sky Inspection) was engaged by Benue Cement Company to discover and assist in recovering excess and illegal charges on the company’s accounts by banks. Sky Inspection embarked on the assignment and many banks were found wanting and recoveries were made. Some of the banks willingly refunded the excess charges with letters of apology. Issues surrounding payment (commission) for the services rendered by the consulting firm was the subject of litigation, which is not our concern in this piece. The case stands as a ready example for banks and excess charges.

Business and Legal Tactics

As seen above, one of the ways to survive bank’s excess charges is awareness. You need to understand that as trustworthy as banks might be, they can handle figures to your financial detriment.

Next is to engage the services of a financial consultant who will review your account to track hidden, excess or illegal charges. Also, banks are familiar with the request for account reconciliation exercise. Most times, the banks will oblige the request. It is interesting to note that usually, where a bank is found wanting, it will likely concede and make a refund.

But oftentimes, you will not be able to recover the cost incurred in engaging the financial consultant, and interest on the sum deducted and withheld by the bank except through the courts, with the help of legal consultants. 

This was the situation in a recent case decided by the Supreme Court on 18 December 2020 – Skymit Motors Ltd v. United Bank of Africa Plc [2021] 5 NWLR (Pt. 1768) 123. In the case, Skymit Motors was a customer of UBA. The company was granted several facilities. Upon discovering that the Bank imposed arbitrary and uncontracted interest rate charges on the facilities without its knowledge, consent or approval, the company engaged the services of a financial consultant, Corimol Nigeria Ltd., to reconcile its accounts with the Bank. After the reconciliation, the report of the Consultant revealed a number of excess interest charges, excess and illegally charged commissions on turnovers, and unlawful interest charges on excess charges on its two accounts.

Skymit Motors wrote UBA to refund the excess charges and interests but the Bank won’t blink an eye. Aggrieved, the company sued the Bank. At a pre-trial conference, the Bank admitted through its Counsel that, indeed, there were excess charges in the sum of about N7.2 Million. The Judge entered judgment in the sum admitted by the Bank. But no interest was awarded. Skymit Motors subsequently filed an application for an award of interest on the N7.2 Million which was to run from the date the case was filed. The trial Court dismissed the application. The company appealed to the Court of Appeal which allowed the appeal by granting post-judgment interest but declined to grant pre-judgment interest on the ground that it was not pleaded and proved. The Supreme Court upturned the decision of the Court of Appeal on pre-judgment interest and held that UBA was bound to pay pre-judgment interest.

For clarity, a post-judgment interest is interest awarded on a judgment sum which runs from the date judgment was delivered until the money is fully paid. The rate is usually 10% as provided by the Rules of Court. On the other hand, pre-judgment interest, as the name suggests, is interest accruing before judgment. It usually runs from the date the case was filed. It may also run from the date of default in payment, subject to the agreement by the parties. For a person to be entitled to pre-judgment interest, there must be basis for it. Pre-judgment interest could be based on statute, agreement, mercantile custom, or under a principle of equity (which recognises that unlawfully holding on to money belonging to someone else should ordinarily attract interest, given that the value of money is not static and might suffer inflationary trends).

Thus, in Skymit Motors’ case, Kekere-Ekun, JSC explained the basis for the Supreme Court’s award of pre-judgment interest against UBA as follows:

There is no doubt that the Appellant (Skymit Motors) claimed pre-judgment interest in its pleadings. It is also not disputed that there was a banker/customer relationship between the parties and that the wrongful deductions from the Appellant’s account by the Respondent (UBA) constitutes a breach of the fiduciary duty owed it by the Respondent. The Respondent, having admitted the claim to the tune of N7,209,906.55, it follows that all the facts and material necessary for the award of pre-judgment interest was before the Court. With due respect to the Court below, it therefore erred when it held that the claim for pre-judgment interest was not proved. The Appellant was entitled to be compensated for the period for which its funds were wrongfully deducted by the Respondent and for keeping it out of use of the said funds for the stated period.

The Supreme Court is commended for its position.

Conclusion

Therefore, to save your account from excess charges, awareness is key; and the timely engagement of the services of reliable financial and legal consultants is paramount and strictly advised.