3RD ANNUAL AFRICA DIALOGUE FOR
CONSUMER PROTECTION
CONFERENCE
ABUJA ,NIGERIA
SEPT 13TH – 15TH 2011
BY
MR. DANIEL ASHER
PROGRAMME OFFICER
CUTS AFRICA RESOURCE CENTRE,
NAIROBI
nairobi@cuts.org
www.cuts-international.org
1.
BACKGROUND
2.
FINANCIAL CONSUMER PROTECTION AGENCIES IN KENYA
3.
FINANCIAL CONSUMER PROTECTION LAWS/REGULATIONS IN
KENYA
4.
CONSUMER PROTECTION CHALLENGES IN KENYA
5.
RECCOMMENDATION
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 Financial
consumer protection is about
ensuring a fair exchange between
providers and consumers of financial
services.
 In Kenya:
 Financial services consumers include users
of basic credit, savings, and payment
services provided by:
 Banks, mobile financial service providers,
 Savings and credit cooperatives
(SACCOs),
 Microfinance institutions (MFIs). Insurance
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 Ministry
of Finance lead provision of policy
framework for the financial sector Other
stakeholders in the regulation & supervision
regime including:
 Central Bank of Kenya (CBK),
 Capital Markets Authority (CMA),
 Insurance Regulatory Authority (IRA),
 Retirement Benefits Authority (RBA),
 SACCO Societies Regulatory Authority
(SASRA)
 Commissioner of Cooperatives,
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 The
Government of Kenya’s Vision 2030
Strategy has broad goals that include
promoting financial inclusion, improving
transparency and affordability of
financial services, and increasing
competition in the sector to benefit
customers and the overall economy.
 The
IRA, RBA and CMA provide
recourse to consumers unable to
resolve their grievances through the
provider dispute channels
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Constitution recognizes consumer rights
 CBK, under ministry of finance, is responsible for:
› formulation & implementation of monetary
policy,
› fostering the liquidity,
› Solvency & proper functioning of financial
system.
 development blue print “Vision 2030” has broad
goals on promoting financial inclusion, improving
transparency & affordability of financial services,
 emphasizes on enhancing financial stability to
benefit financial service consumers .
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Kenya has no laws or regulations for non-bank
companies that offer mobile financial services.
CCK regulates the Mobile Fin Ser Providers with
the Kenya Communications Regulation of 2001
under authority of the Kenya Communication Act
of 1998.
The Central Bank of Kenya Act assigns authority
to the CBK as the regulator of banking activities
and in accordance to the Banking Act.
The CBK Act fails to define specific mandate for
consumer protection.
Banking Act, establish the framework for CBK to
regulate the conduct of banks in the interest of
consumer protection.
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Banking Act provides specific guidelines on
practices that affect consumers.
Section 11 prohibits, & holds bank officers
accountable for fraudulent and reckless behaviour.
Term “fraudulent” under Banking Act include
“intentional deception, false and material
representation, concealment or non-disclosure of a
material fact or misleading conduct,”
Section 16A prohibits the charging of fees on savings
and fixed deposit accounts.
Section 33, authorize CBK to exercise intervention
options incase a bank operate “in any manner
detrimental to or not in the best interest of its
depositors or members of the public.”
Section 44A (1)-(3) restricts the maximum amount
banks can recover on non performing loans under
the In-Duplum rule.
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Article 44 instructs that “no institution shall
increase its rate of banking or other charges
except with the prior approval of the Minister.”
 Article 55(2) states that Central Bank may, at any
time direct any person to withdraw amend or
refrain from issuing any advertisement, brochure,
circular or other document relating to deposits
which, in its sole discretion, it considers to be
misleading.
 2010 Agent Banking Guidelines: has specific
principle related to bank responsibility for the
agent’s conduct and consumer protection
measures.

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2008 Credit Reference Bureau Regulations: addresses
credit reporting-related issues of transparency, fair
practice and recourse in a comprehensive way.
 The Insurance Act has a detailed consumer protection
mandate for the IRA.
 The Act contains specific guidelines related to
transparency, pricing, prohibited practices and
consumer rights, and establishes a recourse role for the
IRA.
 Insurance (Amendment) Act of 2006 Cap 487. empowers
the IRA to protect the interests of policy holders and
beneficiaries in any insurance contract
 IRA has an explicit mandate to operate a recourse
mechanism
 The Cooperative Tribunal
 KBA has a recourse mechanism for consumers that
cannot resolve their issues with their bank. banks have
customer care desks in branches,
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The Banking Regulations of 2006 prescribe procedures to be
followed for increasing the rate of banking and other fees.
Deposit-taking MFIs are regulated by the CBK with the same
conventions found in the banking regulations.
The Microfinance (Deposit Taking MFI) Regulations of 2008
forbid fraudulent or reckless credit and prescribe know-yourcustomer requirements.
National Payment System Department of the CBK provide
oversight to Mobile and other microfinance service providers
focusing on integrity of IT and service delivery systems
protecting customers from operational failures and financial
failure of the MFSPs.
SACCO Societies Act of 2009: establish comprehensive
regulation and supervision framework for the SACCOs,
creating the SACCO Societies Regulatory Authority
SACCO members may complaints to the District or Provincial
Cooperative Officer, which are eventually forwarded to the
Cooperative Tribunal.
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Kenya’s legal provisions are lacking in terms of
financial consumer protection
The consumer participation has been absent in many
of the financial institutions in the country.
Uncertainty about available options for recourse,
and the legal basis in the consumer financial
services
The recourse systems in place are not friendly or
timely, redress requires hiring of a lawyer
Financial consumers are often confronted with the
problems of ‘fine prints’: -Hidden fees and rates
Non-standardized terms of financial services making
financial products difficult to evaluate for rational
consumer choices
Lack of a pre-defined standard of recourse
General financial consumer illiteracy in the country
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Kenya Needs:
 An enforcement agency with a market-wide
protection mandate to protect all financial
consumers
 Sound regulations blended with precise and
comprehensive financial consumer protection
legislations to guide on:
› minimum disclosure requirements for pricing and plain
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language in contracts.
mode of communication to consumers on changes to the
terms of the contract, consumer rights and obligations,
provisions on monthly loan account statements
The period under which consumers can refuse to take a
loan after signing the contract and do not have to pay a
penalty fee
minimum requirements for provider-level dispute resolution
mechanisms and independent third-party recourse
Provider liability and responsibility for oversight of third-party
agents who play a role in service delivery.
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An all inclusive Consumer financial education with
priorities on legal provisions;
Standardized recourse process to all financial
service consumers to curtail against unscrupulous
financial service providers;
Strong legislations to protect on confidentiality of
financial consumer’s info
policy reforms that enhance consumer trust
towards financial system;
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CONTACT:
Daniel Asher
Consumer Unity & Trust Society -Africa Resource Centre
(CUTS-ARC), Nairobi
Yaya Court- Room No.5, Ring Road Kilimani
P.O.BOX 8188-00200 Nairobi, Kenya
Ph: +254 20 386 214 9, 386 215 0, 20 232 911 2
Fax: +254-20- 3862149
Mobile: +254 725 913 125/ 733 990 202
Email: doa@cuts.org
Website : www.cuts-international.org
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