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The Competition Authority of Kenya (CAK) is cracking down on banks that impose charges on customers, charges that had not been previously disclosed to the customer. This is in line with the authority’s prerogative under Section 56(3) of the Competition Act, which states as follows: –

A person shall not, in the provision of banking, micro-finance, insurance and other services, impose unilateral charges and fees, by whatever name called or described, if the charges and the fees in question had not been brought to the attention of the consumer prior to their imposition or prior to the provision of the service.

CAK has accused some tier-one banks of providing misleading information to customers or failing to disclose additional charges to customers during lending, violating agreements with customers, and imposing unfair charges on customers. These practices have led to financial hardships, defaults in loan repayment, and damaged credit scores.

The move by CAK has come amid growing concerns by members of the public of additional and hidden charges imposed by lenders in the conduct of their business.

Previously, the banks handled complaints of this nature, often leading to dead ends. Now, with increased consumer education initiatives, borrowers are more aware of their rights and can escalate issues to the CAK for investigation.

The CAK investigates most of these cases; however, some are forwarded to the Central Bank of Kenya and the Insurance Regulatory Authority for further action.

This move by the CAK, aimed at improving information symmetry between banks and their customers, is a step towards fostering customer trust in banks and ensuring fairness in the banking sector.

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