Banks face fresh competition agency probe over pricing

What you need to know:

The Competition Authority of Kenya (CAK) says it expects to complete the investigations by June 30.
The CAK will also look into the lenders’ disclosures to customers and consumer protection issues.
The watchdog will also check if banks place hurdles for customers who want to migrate from one institution to another, and document costs involved while users switch providers.

Kenyan banks face fresh scrutiny from the competition watchdog in the second phase of investigations into their products pricing and possible restriction of customers’ choice.

The Competition Authority of Kenya (CAK) says it expects to complete the investigations by June 30. The watchdog will also look into the lenders’ disclosures to customers and consumer protection issues.

The regulator early last year conducted the first phase which focused on the market structure (number of banks and market shares) and concluded that the structuring is adequate to support competition.

“The first inquiry did not reveal signs that the market structure has negative impact on the performance of banks,” said the CAK director-general Wang’ombe Kariuki in an interview.

The watchdog has appointed Switzerland-based Macmillan Keck and South Africa’s Acacia Consulting to investigate the industry, which has for years been accused of exhibiting cartel-like behaviour at the expense of consumers.

“We realised that there could be issues to do with consumers’ protection and that is what we will be looking into. For instance, if you want to change banks due to bad services, transferring is sometimes very difficult,” said Mr Kariuki.

READ: Watchdog probes banks for breach of competition rules

One of the issues to be analysed is whether there is information asymmetry that disadvantages consumers. The regulator will also check if banks disclose all the facts needed on specific products and services.

This includes information regarding digital banking platforms such as mobile and Internet banking and the costs associated with their use, including taking out loans.

The authority will also check if banks place hurdles for customers who want to migrate from one institution to another, and document costs involved while users switch providers.

Control of consumers’ transactional data and how this is sold or accessed by third parties and whether customers have access to it will also be investigated.

“Members of the public with relevant information may submit oral or written submissions to the secretariat of the consultant within 21 days of the publication of this notice,” said Mr Kariuki in a gazette notice published on Friday.