FAIR TREATMENT OF CONSUMERS IN FINANCIAL SERVICES: KEY COMPLIANCE LESSONS FROM REGULATION AND PRACTICE

Consumer protection has become a central enforcement priority in Tanzania’s financial sector. Under the Bank of Tanzania (Financial Consumer Protection) Regulations, GN No. 884, financial service providers face heightened regulatory scrutiny on how they treat consumers—particularly in lending, debt recovery, and contract structuring.

This brief update highlights core obligations and practical lessons drawn from regulatory practice and disputes.

1. Non-Discrimination: A Compliance Baseline

Financial institutions are prohibited from discriminating against consumers on grounds such as gender, age, disability, religion, tribe, or social status. Beyond overt discrimination, practices involving intimidation, humiliation, misrepresentation, or unfair inducement are equally prohibited.

Practice insight:
In several consumer complaints handled at regulatory and institutional level, discriminatory conduct has not arisen from policy, but from front-office behavior, agents, or automated decision systems. Institutions are increasingly expected to demonstrate internal controls, staff training, and complaint-handling mechanisms to mitigate this risk.

2. Unfair Business Practices: Recurring Enforcement Triggers

The Regulations expressly prohibit practices such as:

• Unsolicited loan offers
• Abusive debt recovery methods
• Retrospective interest or penalty increases
• Charging unaccrued interest
• Automatic credit limit increases without consent
• Fees on dormant or low-balance accounts
• Automatic overdrafts without opt-in consent
• Bundling or tying of products

Case-based commentary:
In disputes involving microfinance institutions and digital lenders, regulators have consistently focused on lack of informed consent, particularly where fees or deductions were triggered automatically. Institutions relying on standard-form digital contracts have faced adverse findings where opt-in consent was implied rather than explicit.

3. Bundling, Tying, and Opt-In Clauses: Contract Risk Areas

Bundling and tying practices are not unlawful per se, but become problematic where consumers are denied meaningful choice or transparency. Opt-in clauses that impose obligations without voluntary consent are closely scrutinized. 

Legal lesson:
Consumer disputes frequently turn on contract drafting and disclosure, not pricing alone. Courts and regulators tend to construe ambiguities against the service provider, especially where power imbalance is evident.

4. Interest Calculation: Regulatory Approval Is Mandatory

The use of the straight-line method, or any interest calculation method not sanctioned by the Bank of Tanzania, is prohibited.

Enforcement trend: 
Institutions have faced regulatory intervention where internal systems applied non-approved methods despite compliant loan documentation. This highlights the need for alignment between legal documentation and operational systems.

Conclusion

The Financial Consumer Protection Regulations are no longer aspirational they are actively shaping regulatory enforcement, dispute resolution, and compliance expectations. For financial institutions, the greatest risks arise from automated processes, third-party agents, and poorly reviewed standard contracts.

Law firms advising in this space play a critical role in:

• Regulatory compliance audits
• Contract and product reviews
• Consumer dispute management
• Enforcement response and risk mitigation

NB: This publication is for general information only and does not constitute legal advice and therefore should not be acted upon without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, RightMark Attorneys, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.