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Financial consumer protection: the requirement to establish a consumer complaints handling mechanism

  • Market Insight 07 July 2020 07 July 2020

In this update we discuss the requirements under Part IX of the Bank of Tanzania (Financial Consumer Protection) Regulations of 2019 (the Regulations), for financial service providers in Tanzania to establish a consumer complaints handling and redress mechanism. The Regulations came into force on 22 November 2019, to provide an overall framework for the Bank of Tanzania (BOT) to enforce financial consumer protection and compliance by financial service providers operating in Tanzania.

Financial consumer protection: the requirement to establish a consumer complaints handling mechanism

Click here to read our recent article on the New Bank of Tanzania Regulations on Financial Consumer Protection


A 'financial service provider' is defined under the Regulations as an institution licensed, regulated and supervised by the BOT; while a 'consumer' is defined under the Regulations as a person that uses, has used or is, using, any of the financial products or services provided by a financial service provider.

Internal complaints handling procedures

The Regulations grant financial consumers the right to file a complaint against a financial service provider upon being dissatisfied or aggrieved by the conduct of the financial service provider. The Regulations further require the financial service provider to establish a mechanism for receiving and processing consumer complaints (the Consumer Complaints Mechanism) and further require the financial service provider to furnish information of the Consumer Complaints Mechanism to the consumer.

Pursuant to the Regulations, the Consumer Complaints Mechanism must have multiple channels with clear procedures including telephone numbers, help desk, dedicated email addresses and web chat. It should also be free, fair, accessible, timely, transparent and independent. Financial service providers must ensure that the Consumer Complaints Mechanism is capable of acknowledging the complaint, keeping the complainant updated throughout the process, and keeping a record of all complaints.

In addition to the above, the Regulations require every financial service provider to develop a fair redress mechanism and compensation policy for all aggrieved consumers.  The compensation policy must be in line with the guidelines issued by the BOT and include details of compensation for erroneous debits, excess charges and financial loss to consumers due to staff negligence or fraudulent activities. The First Schedule to the Regulations provides for the statutory timeframes within which financial service providers are required to resolve certain types of consumer complaints (which vary between six hours to fourteen days depending on the type of product that is the subject of the complaint).

The Regulations further require financial service providers to avoid conflicts of interest when handling consumer complaints. As such, an officer of a financial service provider must not be involved in the processing of complaints if they are party to or have an interest in the complaint.

Where a complaint from the consumer involves more than one financial service provider, the responsibility to resolve the matter shall solely be on the service provider who initiated the financial product or service.

Where a complaint has been resolved, the financial service provider and the consumer are required to sign a Complaint Resolution Declaration Form as prescribed in the Second Schedule of the Regulations.

Escalation of complaints to the Bank of Tanzania

If a complaint is not resolved in a timely manner or if it is resolved in a manner that is not satisfactory to the consumer, the Regulations enable the consumer to escalate their complaint to the BOT through the form prescribed in the Third Schedule to the Regulations. Escalation of complaints by the complainant to the BOT can only be made within 14 days of lapse of the prescribed time within which the financial service provider is required to resolve the complaint; or within 14 days of receipt of an unsatisfactory resolution from the financial service provider.

The Regulations make it clear, however, that for the BOT to intervene it must be satisfied that:

  • the financial service provider has handled the complaint to its finality
  • the consumer has not been satisfied with the decision reached by the financial service provider
  • the prescribed time for handling the complaint by the financial service provider has lapsed without the consumer getting a notification from the financial service provider
  • the complaint has not been subject to legal proceedings before a court or tribunal or any other competent authority
  • the complainant has suffered financial loss or material inconvenience

The BOT may, upon making a determination of the complaint, order the financial service provider to:

  • compensate and refund the affected consumer
  • correct the erroneous data, information or statement
  • cease or desist from the conduct that is the subject of the complaint
  • make a formal apology
  • do or desist from doing any other thing or action as the BOT may deem appropriate

A determination by the BOT on the complaint referred by a complainant shall be binding and conclusive on the parties. The Regulations allow the complainant or financial service provider, within seven days from the date of delivery of the determination by the BOT, the option of requesting the Governor of the BOT for a revision of the determination made by the BOT. If the complainant or the financial service provider is dissatisfied with the determination or revision of determination made by the BOT, the Regulations allow the complainant to apply for judicial review from the High Court of Tanzania.

In view of the above, financial service providers in Tanzania should ensure that they put in place an appropriate Consumer Complaints Mechanism as required by the Regulations. Additionally, financial service providers should take into account the statutory timelines required to resolve consumer complaints when designing their complaints handling policies and procedures. Non-compliance with the Regulations (including the requirement to have a Complaints Handling Mechanism) may attract enforcement actions and sanctions by the BOT including:

  • suspension from operations for a period not exceeding one year
  • a fine or penalty not exceeding TZS twenty million (approximately USD 8,700)
  • suspension of management staff
  • conditions, restrictions or cancellation of registration or license provided
  • disqualification of management to carry out regulated activities
  • publication of the names of offenders
  • reprimands
  • other sanctions deemed appropriate, including a TZS one million (approximately USD 435) daily fine for continued non-compliance 

This briefing is prepared for clients and contacts of Clyde & Co Tanzania. We aim to keep our clients abreast of developments in Tanzania as they happen and if you have any questions on the issues raised above please contact us directly.

Further advice should be taken before relying on the contents of this summary. Clyde & Co Tanzania accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this summary. No part of this summary may be used, reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, reading or otherwise without the prior permission of Clyde & Co Tanzania.


Additional authors:

Peter Kasanda

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