By Favour Nnabugwu
THE Central Bank of Nigeria (CBN) has warned banks against offering products that incorporate insurance features, following its revised guidelines on Bancassurance Model.
Bancassurance is arrangement in which insurance companies leverage on the customer base of banks to sell insurance products to banks’ customers while referral model is when a bank refers its customers to its partner insurance companies and in return receives a commission from the insurance company.
The apex bank also cautioned financial institutions against offering free premium payments as a feature of any of their products while the banks are not permitted to provide bancassurance referral service in a manner that contravenes these guidelines.
It will be recalled that CBN, in 2010 regulation, on the Scope of Banking Activities and Ancillary Matters No. 3, 2010, was issued to repeal the Universal Banking Model, which hitherto permitted banks to engage in non-core banking financial activities either directly or indirectly through designated subsidiaries.
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