Are Banks Allowed to Name and Shame Defaulting Customers?

In 1896, the Bank of British West Africa (which later became the Standard Chartered Bank) opened its first branch in Accra. Between 1920-1950, the Bank of British West Africa and Barclays Bank were the only banks operating in the Gold Coast[1]. The banking landscape has since changed and Ghana now has over 35 banks. But the banking sector which used to be one of the country’s best performing sectors is having a hard time.

Anyone who cares a wee bit about the banking sector would have heard of how difficult it is for banks to recover the loans that they give out. And tales abound of how difficulties in loan recoveries are threatening the very existence of banks. It is not surprising, therefore, that a bank recently went as far as publishing a list of its defaulters (together with their photographs) in a national newspaper.

Now, here is the question: Can a bank name and shame its defaulters by publishing their names and images in a newspaper?

 First, let’s be clear. A bank owes a duty of confidentiality to its customers. This is beyond dispute. The critical question is how far and wide is this duty of confidentiality?

The Banks and Specialized Deposit Taking Institutions Act, 2016 (Act 930) has elaborate provisions on confidentiality of customer information. Act 930 provides that a person with access to the books, accounts, records, financial statements or other documents of a bank or specialized deposit-taking institution shall take an oath of confidentiality before the person begins to perform any function under Ghanaian banking laws[2]. In the specific case of customer information, Act 930 provides that a banking official shall not during or after a relationship with the bank or specialized deposit-taking institution, disclose directly or indirectly to any person any information related to the affairs of any of its customers including deposits, borrowing or transactions or other personal or business affairs without the prior written consent of the customer or the personal representative of the customer[3].

That said, customer information can be disclosed to the Bank of Ghana (as regulator)[4], the Ghana Revenue Authority[5], the Financial Intelligence Centre[6], the Collateral Registry[7], the Securities and Exchange Commission[8] or under either the Credit Reporting Act[9] or the Ghana Deposit Protection Act[10]. The duty of confidentiality does not also apply in cases where the customer is declared bankrupt or insolvent or in the case of a company which is being wound up[11];  or where the customer is dead and the information is required by the personal representatives or executor[12]; or where the express consent of the customer has been sought[13]; or where civil proceedings have been have been instituted involving the bank or account of the customer[14] or where the disclosure is required by an enactment[15]

From a critical reading of the provisions on confidentiality contained in Act 930, nothing gives a bank the right to put the name of defaulting customers in the public domain- through a newspaper publication. This can only be done upon an order of a court. And even in this instance, the bank must prove to the court that it has attempted on three or more occasions to serve the defaulting customer with notice of a civil action

The publication of customer images and details in newspapers is not only in breach of the banking laws. It is in breach of the Data Protection Act, 2012 (Act 843) which seeks to protect and regulate the disclosure of private information of individuals.

Banks, as data processors, are required to treat personal information of their customers as confidential. Act 843 releases banks from the duty of confidentiality only where it is necessary for (i) public order; (ii) public safety; (iii) public morality; (iv) public morality; (v) national security; and (iv) public interest[16]. Act 843 also empowers a bank to disclose customer details for the prevention of crime, detection of crime, apprehension or prosecution of an offender and assessment and collection of taxes[17]. Act 830 also allows the disclosure of information to protect the public against loss or malpractice in the banking sector. As we have seen, there is once again nothing that allows a bank to publish the names of its defaulters [without reference to a court] in a newspaper.

Practice elsewhere

Publication of the names of defaulters in newspapers is not only limited to Ghana. In 2017, some Nigerian commercial lenders listed hundreds of bad debtors in full-page newspaper adverts under a directive from the Central Bank of Nigeria. This authorization saw Fidelity Bank, Skye Bank, Zenith Bank, Enterprise Bank, Sterling Bank, Stanbic IBTC Bank and Guaranty Trust Bank publish the names of those who owed them money along with the details of the sums outstanding. It is worthy to note that the publication was undertaken on the basis of an order of the Nigerian Central Bank. India also permits banks to publish the names, photographs and other relevant details of a customer. The Indian Supreme Court has endorsed this practice because there is statutory backing for it[18].

The same cannot be said of Ghana. There is absolutely nothing that empowers a bank to publish customer information in a newspaper. There is no statutory basis for this neither is there any directive from the Bank of Ghana to that effect. And until such time that there is a clear directive on this, I think it is fair to say that banks should desist from publishing the names of their defaulters in newspapers.

[1] Joshua Yindenaba Abor (2016), “Financial Markets & Institutions: A frontier Perspective”

[2] ibid

[3] Section 146(2)

[4] Section 146(3)(a)

[5] Section 146(3)(b)

[6] Section 146(3)(c)

[7] Section 146(3)(d)

[8] Section 146(3)(g)

[9] Section 146(3)(e)

[10] Section 146(3)(f)

[11] Section 146(4)(b)

[12] Section 146(4)(c)

[13] Section 146(4)(d)

[14] Section 146(4)(e)

[15] Section 146(4)(j)

[16] see section 60

[17] section 61

[18] see DJ Exim (India) PVT Limited v State Bank of India; Writ Petition (L) No.2808/2013