Banks want Equity, Family and 3 others dropped from class suit

Corporate News

Habil Olaka, the Kenya Bankers Association chief executive. PHOTO | FILE 

By BRIAN WASUNA, bwasuna@ke.nationmedia.com

In Summary

• The Kenya Bankers Association says Equity, Family, UBA, Gulf African Banks and HF were not registered lenders in July 2003 when Rose Florence Wanjiru filed a suit on behalf of bank customers seeking compensation for illegal charges levied on their accounts .
• KBA adds that HF is not a commercial bank but a mortgage finance company, hence should not be enjoined in the suit.
• Ms Wanjiru sued all banks in Kenya for increasing interest rates and charging banking fees without seeking approval from the Finance minister.

A lobby is seeking to strike out five banks from a class action suit filed against all lenders in the country, arguing that they did not exist when the matter moved to court in 2003.

The lobby says Equity, Family, UBA, Gulf African Banks and Housing Finance (HF) were not registered lenders in July 2003 when Rose Florence Wanjiru filed a suit on behalf of bank customers seeking compensation for illegal charges levied on their accounts without approval from the Finance minister.

KBA adds that HF is not a commercial bank but a mortgage finance company, hence should not be enjoined in the suit.

Ms Wanjiru is seeking to amend her court papers to suck in non-bank finance institutions which are members of KBA, a move that will allow her to enjoin HF in the suit.

Equity Bank is facing the highest number of complaints in the suit which has now attracted 187 other depositors. The lender faces 42 compensation claims. Family Bank is facing two complaints while Gulf African and HF each have one claim.

Ms Wanjiru sued all banks in Kenya for increasing interest rates and charging banking fees without seeking approval from the Finance minister.

The suit has threatened to shake the banking industry to its core as lenders could be forced to part with billions of shillings in compensation.

“Equity, Family, UBA, Gulf African Banks and HF were neither banks nor members of KBA when this case commenced on July 22, 2003. It would be prejudicial to KBA to allow Ms Wanjiru to widen the scope of the classes of persons represented in the manner sought,” KBA’s chief executive Habil Olaka says.

READ: Equity Bank faces most complaints in class action suit

Other banks facing complaints are Barclays (37), KCB (34), CFC Stanbic (6), NIC Bank (4), Consolidated Bank (2) and Diamond Trust Bank, Chase Bank and Oriental Commercial Bank each with one claim.

Ms Wanjiru is demanding Sh195,000 compensation for ledger and ATM fees charged to her Standard Charted Bank account, but has left it to the court to decide how much she and other depositors should get in damages.

Standard Charted wants the court to strike out Mr Gichuki’s claim on deaths resulting from stress and depression, arguing that it is scandalous and aimed at harming the lender’s defence of the suit.

The Supreme Court in October threw out a last ditch effort by banks to dismiss the class action suit that has now attracted 187 other customers.

Judges Njoki Ndung’u, Kalpana Rawal, Philip Tunoi, Jackton Ojwang and Smokin Wanjala ruled that the issues the KBA had raised in its appeal against procession of the suit had not been argued in the lower courts and could therefore not be handled by the Supreme Court.

The KBA went to the Supreme Court after the Court of Appeal dismissed its bid to terminate the class action suit in October 2013.

But Standard Charted and KBA want all 188 plaintiffs to specify the amount they are claiming.