Banking sector to face anti-competition investigation

The Competition Authority has moved to investigate anti-competitive behaviours in Kenya’s financial sector.

Wednesday February 10 2016

Competition Authority of Kenya (CAK) Director General Francis Wang'ombe during an interview in his office. CAK's report has pointed out that to enhance provision of various services, professionals should be allowed to form joint cross-ventures that provide strong one-stop shops such as in the insurance, security stocks and banking sectors where banks have established agencies within their halls. PHOTO | SALATON NJAU | NATION MEDIA GROUP

Competition Authority of Kenya (CAK) Director General Francis Wang'ombe during an interview in his office. PHOTO | SALATON NJAU | NATION MEDIA GROUP 

By JAMES KARIUKI
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The Competition Authority has moved to investigate anti-competitive behaviours in Kenya’s financial sector such as restrictions on account switching and sharing of customer data without consent.

The agency has appointed Macmillan Keck Attorneys & solicitors and Acacia Economics to carry out a market inquiry on the banking sector.

It said that mobile money practices will also be placed under scrutiny especially use of financial information of customers by digital loan providers to determine creditworthiness of an individual without a customers’ knowledge.

The investigation will seek to find the level of transparency in the system when it comes to charges such as loan costs, account fees among other services and their justification.

DENIED INFORMATION

In a public notice published in the Daily Nation Wednesday, CAK said that the study will establish whether consumers have been denied information on their mobile financial activities that could enable them get loans on favourable terms.

The study seeks to authenticate reports provided by digital credit providers to credit reference bureaus on whether the providers deliberately release information on bad borrowers while concealing information on good borrowers much to their advantage.

“It will assess if there exists restrictions on consumers’ use of their own digital transactional data and provision of the same to third parties for commercial use,” it said.

“We want to explore and establish is there are any barriers to bank customers switching providers, if customers are aware of any alternatives, the ability to access information on switching, account closure practices and any behavioural biases that hinder customers from switching,” the notice reads.

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