Highlights include:
- financial consumer protection regulations
- spousal consent on mortgages
- financial consumer complaints handling mechanism
- monetary policy and non-performing loans (NPLs)
- foreign exchange directives
- COVID-19 and banking
- microfinance service providers
In January, we published an update on the new Bank of Tanzania Regulations on financial consumer protection. The update explored key provisions of the Bank of Tanzania (Financial Consumer Protection) Regulations that were published as Government Notice No. 884 of 2019 (the Regulations). Key players under the Regulations are the financial consumer, the financial service providers and the Bank of Tanzania (BOT).
The Regulations make it imperative for financial service providers to adopt policies and a mechanism for ensuring financial consumer protection. Every financial service provider must have a structure of governance that ensures effective implementation of consumer protection. The Regulations also provide for non-discrimination of consumers and the need for financial service providers to adopt transparent consumer contracts with fair terms. The Regulations also provide for the requirement of financial service providers to establish complaints handling and redress mechanism.
The BOT plays a major role in the general supervision of compliance to the Regulations, having the mandate to investigate potential breaches of the Regulations and impose penalties and sanctions thereto.
Spousal consent on mortgages
In June, we published a legal update following the decision of the Court of Appeal of Tanzania (the Court) regarding the requirement of spousal consent on mortgages. The case of Hadija Issa Arerary v Tanzania Postal Bank, involves a mortgage secured by a third party with whom the Appellant claims to be married to. The Appellant challenged the Respondent’s right to sell the mortgaged property after the borrower defaulted on the loan.
The Court considered both the duty of the mortgagor to disclose his marital status and the mortgagee to take reasonable steps to investigate whether the property was a matrimonial asset. The Court reasoned that the mortgagor’s affidavit of not being married was sufficient. The Respondent was deemed to have taken reasonable steps in satisfying itself that the mortgagor was not married and that there was no third party interest.
The Court’s decision may seem favorable to mortgagees; however “reasonable steps” may vary on a case by case basis. It is imperative that lenders exercise due diligence to ascertain the marital status of the mortgagor in order to properly satisfy the spousal consent requirement.
In June, we published a legal update following the decision of the Court of Appeal of Tanzania (the Court) regarding the requirement of spousal consent on mortgages. The case of Hadija Issa Arerary v Tanzania Postal Bank, involves a mortgage secured by a third party with whom the Appellant claims to be married to. The Appellant challenged the Respondent’s right to sell the mortgaged property after the borrower defaulted on the loan.
The Court considered both the duty of the mortgagor to disclose his marital status and the mortgagee to take reasonable steps to investigate whether the property was a matrimonial asset. The Court reasoned that the mortgagor’s affidavit of not being married was sufficient. The Respondent was deemed to have taken reasonable steps in satisfying itself that the mortgagor was not married and that there was no third party interest.
The Court’s decision may seem favorable to mortgagees; however “reasonable steps” may vary on a case by case basis. It is imperative that lenders exercise due diligence to ascertain the marital status of the mortgagor in order to properly satisfy the spousal consent requirement.
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