Lenders ask High Court to end illegal fees case

Kenya Bankers Association wants court to make decision as lenders fight class action.

Kenya Bankers Association wants the High Court to determine once for all whether Kenyan banks have over the years levied charges on customer accounts without approval from the Finance minister. PHOTO | FILE | NATION MEDIA GROUP 

In Summary

• KBA wants court to determine whether lenders have been increasing charges without approval from the Finance minister.
• KBA boss Habil Olaka says Mr Okutoyi’s petition does not specify which provision of the Constitution on consumer rights the banks have allegedly flouted.
• Section 44 of the Banking Act compels banks to seek a minister’s approval before increasing rates.

By BRIAN WASUNA
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Commercial lenders have asked the High Court to determine once and for all whether Kenyan banks have over the years levied illegal charges on customer accounts, as they fight a fresh class action suit filed on behalf of all borrowers.

The Kenya Bankers Association (KBA) wants the court to examine all evidence provided by a suing Equity Bank depositor and make a determination on whether lenders have been increasing charges without approval from the Finance minister as provided for by law.

Mr Godfrey Okutoyi, in the suit he filed on behalf of all account holders, wants the court to appoint independent experts to examine all bank accounts to determine how much each customer should be compensated for the alleged illegal charges that they have been slapped with.

KBA boss Habil Olaka says Mr Okutoyi’s petition does not specify which provision of the Constitution on consumer rights the banks have allegedly flouted.

He also argues that revealing account information to the said independent experts will be a violation of customers’ privacy rights.

WANJIRU'S SUIT

The association is, in a separate suit, battling a case filed by businesswoman Rose Florence Wanjiru in 2003, which also accuses lenders of levying charges on customer accounts without prior approval from the Finance minister.

Section 44 of the Banking Act compels banks to seek a minister’s approval before increasing rates.

Ms Wanjiru’s suit is before the High Court following a failed bid by lenders to have the Supreme Court dismiss her case. Justice Francis Gikonyo last August allowed 191 account holders to join Ms Wanjiru’s suit.

Mr Okutoyi has also challenged the move banks to increase interest rates without the Treasury’s approval.

He also faults the CBK for negligence, arguing that the regulator has failed to take action against institutions violating banking laws.

“The CBK has failed to supervise KBA’s members in their continued arbitrary deprivation of customers’ property. It would be in the interest of justice if all the illegally levied rates of banking and other charges were ordered to be clawed back to respective customers’ accounts,” says Mr Okutoyi.

Justice Isaac Lenaola will mention Mr Okutoyi’s suit on April 27.