Financial service providers such as banks, SACCOS and other institutions offer customers products and services that empower them to manage and grow their financial resources. As part of our Initiative to raise Financial awareness during Global Money Week, 2024 we have summarised some of the matters Customers should consider when accessing financial services:
1. Tarrifs and Commissions
As with any business, Financial Institutions charge customers for their products and services. These charges, more commonly known as Tariffs and Commissions, are levied on the Institutions offerings, and are not limited to fees charged on transactional accounts, loan accounts, credit cards and the various channels customers transact across. Financial institutions are required to advise their customers about applicable tariffs they will pay for day-to-day running of the account. Customers should be aware that it is best practice for these Financial Institutions to notify their customers at least 30 days in advance or before material account changes are effected.
2. Loans and Change of Interest or Profit Rates
Interest Rates that are charged when a customer secures a Loan with a Financial Institution may from time to time be reviewed by their Financial Institution. In such an event the Financial Institution should inform their consumer on the change the interest rates on accounts and should provide notice in line with standard notification practice. For Islamic banking customers on the other hand term “Interest” does not apply but rather Profit and as per Shari’ah Principles, once a contract of financing has been signed between the bank and the customer, none of these parties has the right to change the profit rate, regardless of the fluctuation of rates in the market.
3. Rights to accurate reporting and confidentiality
In as much Customers do make a lot of effort to repay their Loans there are circumstances under which some Customers have often found that their details have been inaccurately published by the Credit Reference Bureau therefore being detrimental to any future borrowings. Customers however have the right to dispute any inaccurate information published by the Credit Reference Bureau, including incomplete or inaccurate information and there are laws and regulations on how to settle these disputes.
4. Closure or Freezing of Accounts
Some Customers may experience the closure of freezing of accounts. It should be noted that 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. However, if the Bank is required to freeze the account in compliance with statutory requirements or legal obligation, a post freeze notice should be given to the customer promptly.
5. Reporting on Unclaimed Financial Assets
Lastly, Financial service providers such as banks are required on an annual basis to hand over to the Unclaimed Financial Assets Authority any unclaimed deposits (cash, cheques, and other assets of financial value) that have not been accessed by the customer in over 2 years. Therefore, customers must ensure that they transact on their accounts so as to prevent their account from falling dormant. In conclusion, Article 46 of the Constitution of Kenya (2010) sets out laws and acceptable practices that the providers of goods and services should adopt when engaging consumers. In addition to the Constitution, the Consumer Protection Act 2012 prevents unfair business practices in consumer transactions. Both Financial Institutions as well as their customers should familiarise themselves with these laws.
Should you require any further information, please do not hesitate to contact us at info@hms.africa.