The Sunday Mail of the 24th of January 2010 carries what the Zimbabwe Investor found to be a disturbing report in which local bank ZB Bank is said to have deducted funds from its clients’ accounts for premium payments into funeral assurance policies which the clients had not applied for and without their consent or knowledge.

The Sunday Mail quotes ZB Bank’s business development manager Mr Shadowsight Chiganze saying that the policy was optional before he went on to place the burden to cancel on their customers saying those who did not want the policy would be refunded. Zimbabwe Investor finds the bank’s response to the Sunday Mail’s questions at the least arrogant and at most damaging to the financial industry and potentially the economy.

At the Zimbabwe Diaspora Investments Conference held in London in September 2009, attended by a Zimbabwean delegation led by Minister in the Prime Minister Gorden Moyo, Zimbabwe Investor challenged the officials from the British Foreign and Commonwealth office on the imposition of sanctions on certain companies, specifically ZB Bank. We argued then as we do now that ZB Bank is a stock exchange listed company whose majority shareholders are millions of Zimbabweans through a pension funds and a combination of various investment vehicles. They also serve the nation across all economic and social sectors and as such should not be entangle in the political disagreements ongoing.

Although the recent actions of the bank have no relationship to the sanctions which we argued to be removed, they do not help to motivate those who are campaigning for their immediate removal.

From a banking code’s point of view, we view the bank’s move as a serious breach of bank’s trust bestowed on the institute to be a custodian of their customer’s assets and as such should be investigated by the regulators. Zimbabwe already has to deal with a banking industry which has roundly imposed inexplicable bank charges and does not need individuals feeling that whatever amount is left after the charges can still be diverted into products which they have not applied for. ZB Bank should be compelled to straight away reverse all the transactions and write to each and every individual client affected apologising for this violation of assets.

Every product sold by a financial institute must follow a “fact find” to establish the potential customer’s needs. ZB Bank’s Mr Chiganze confidently contends that the policy is meant to benefit the bank’s customers who he says are actually seem happy with it. The move smirks of a desperate organisation which has run out ideas to attract new customers and is taking advantage of an existing desperate clientele. By choosing a funeral assurance policy, the bank has simply deliberately identified an area which they know worries every Zimbabwean and use it to emotionally blackmail its clients into accepting the product.

ZB Bank’s actions must not be allowed to go unchallenged as they set a very dangerous precedent for an industry which still needs to do a lot of work to regain confidence. The banking industry is the country’s financial port of entry for all foreign investment. The industry’s ability to be a trustworthy custodian of assets is vital in creating the required perceptions in the confidence building exercise.

The regulators for both the banking and insurance industries should take this action by ZB Bank seriously and move in to investigate as the implications can have far reaching consequences to the country’s economic revival efforts beyond what Mr Chiganze called “a few objections received so far which have been amicably resolved”.