The Competition Authority of Kenya (CAK) is taking a firm stance against hidden bank charges, demanding greater transparency in lending costs for consumers.
CAK Director General David Kibet said there’s need for full disclosure of all fees associated with financial services, stating that the authority will work closely with the Central Bank of Kenya (CBK) to address these concerns.
Speaking at the launch of the Kenya Bankers Association’s (KBA) 2024 Banking Customer Satisfaction Report, Kibet noted the persistent issue of undisclosed fees, despite previous market studies. He stressed that these hidden charges erode consumer trust and negatively impact customer satisfaction.
The CAK’s own research reveals that high fees, along with poor customer service and inconvenient digital platforms, are major drivers of customer dissatisfaction in the banking sector.
Beyond transparency, the CAK is also urging lenders to comply with the CBK’s recent directive to lower interest rates. Following a reduction in the benchmark rate and cash reserve ratio, several banks, including Equity, KCB, and Co-operative Bank, have announced cuts to their lending rates.
However, the CAK cautioned against delays in passing on these benefits to consumers, noting the tendency for businesses to quickly raise prices when costs increase, but delay price reductions when costs decrease.
The CAK’s focus on transparency and lower interest rates aims to protect consumers and foster a more competitive and fair banking environment.
The authority said it is committed to working with the CBK to ensure that banks fully disclose all charges and comply with the directive to lower lending rates, ultimately benefiting consumers and promoting a healthy financial sector.
