29 November 2012

Kenya: Banks Issue New Guidelines, Say Not Binding

Kenya Bankers Ass chairman Richard Etemesi. The Association with CBK rolled out the Credit information sharing of clients amongst banks through the newly formed Credit reference bureau.

BANKERS have launched a new consumer guide on how they will be dealing with their customers. But the guide does not bind a bank or a customer to behave in any particular way, a bankers' lobby group was quick to add.

This means that even though the guide spells out how a customer is supposed to be treated by a bank, it does not have any legal obligations nor can it be quoted in any row between a Kenya Bankers Association member and a customer.

"The guide is not supposed to replace the relationship between a bank and a customer," said KBA chairman Richard Etemesi, who is also the chief executive of Standard Chartered Bank. "It is just like a manual...like when you buy a TV or a car.

The guide says that banks should disclose all the necessary information to a customer before they open an account or take a loan. Such disclosures should include interest rates, charges, fees and all the financial obligations relating to a product or a service.

A customer will also be given extra information on the rights and responsibilities of opening a joint account as well as advice on possible costs and penalties associated when one operates an account in a manner not covered in the account terms and conditions.

In addition, should a bank significantly modify or change the terms and conditions of the various accounts they operate, they should notify the affected customers 30 days in advance.

And unless there are exceptional circumstances, a bank should not suspend or close an account without giving the account signatory at least a 14-day notice.

Kenya Commercial Bank chief executive Martin Oduor-Otieno lauded the initiative and said individual banks may use it to develop their own guides. "This is an excellent start for the industry," he said.

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