Legal Imperative of Financial Ombudsman System in Nigeria?s Banking Sector

Abstract

Banks exist and continue to do business due to the continued patronage of their customers as these customers provide the
basic “raw material,” money, with which banks do business. The banker-customer relationship is fundamentally contractual. However, the two contracting parties have unequal bargaining powers, with the customer occupying a weaker position, despite the customer?s role in the future of the bank. This raises the imperative of instituting a mechanism for the protection of bank customers. In Nigeria, the extant regulatory mechanism does not provide the desired level of bank customer-protection. This paper examines this situation and situates the problem in the absence of a coherent and statute-backed mechanism for addressing customers? complaints. The paper recommends the creation of a banking ombudsman system through enactment, as an objective way of institutionalising a regime of customer-protection. This is a veritable means of curing the glaring lacuna in banking regulation in Nigeria.