Customers of banks and deposit-taking microfinance institutions will have their complaints resolved within seven working days once new regulations come into effect next month.
According to the Kenya Banking Sector Charter 2018, the institutions are also expected to acknowledge the complaint within 48 hours — doing away with a culture in which many institutions hardly acknowledged issues raised against their services.
The new provision is among several others that are scheduled to come into effect on September 1 with comments from the public expected to be closed after August 24.
“An institution, on receiving a complaint, shall provide the complainant with a prompt written acknowledgment within 48 hours and resolve the complaint in seven working days,” says the new requirement. The legal provision is supposed to ensure that financial consumer needs are protected. Consumer protection was cited among major reasons for imposing restrictions on interest rates two years ago.
The Central Bank of Kenya and the Kenya Bankers Association are currently involved in a number of initiatives intended to ensure the customer will be better treated should the interest rate caps be removed.
Treasury cabinet secretary Henry Rotich has proposed in the Finance Bill to remove the restrictions and return the determination of lending rates to market forces. However, the change faces hurdles because a number of parliamentarians have vowed to oppose the move in the House.
Banks are also supposed to educate customers beyond the common product advertising and marketing in a bid to promote financial literacy.
The guidelines stipulate that institutions should give micro, small and medium enterprises technical assistance to improve their capacity in business and financial skills that will enable them secure financing.
In the regulations, banks are required to use credit scoring from rating agencies rather than impose blanket interest rates without considering how much risk each customer holds.
“In order to improve the credit pricing of loans extended to borrowers as well as implement differential credit pricing, based on a customer credit rating, institutions are henceforth mandated to implement risk-based credit scoring techniques in their loan screening processes. The credit scoring rating should be sourced from any of the licensed credit reference bureaus,” says the provision.