Banks fight attempt to include more lenders in illegal fees suit

Commercial banks have assembled big guns in the fight against a class action suit that is seeking to have all lenders charged with levying illegal fees dating back to 1989. 

The Kenya Bankers Association (KBA) – the bankers’ lobby – reckons that allowing businesswoman Rose Florence Wanjiru to amend a suit she filed on behalf of all account holders in Kenya risks changing the scope of the case in a manner that will be unfair to them.

Ms Wanjiru has filed a fresh application seeking to include 10 banks that were not part of the suit she filed in 2003.

The businesswoman also wants the court to compel lenders to compensate account holders whose businesses were closed or placed under receivership after debts they owed banks increased due to levies and charges that were not approved by the Finance minister as required by law.

KBA, however, argues that parties that were enjoined to the suit in August last year were only admitted because they were pursuing the same claims as Ms Wanjiru.

The lobby says that any new claims by the plaintiffs can only be made in a fresh suit as the original case only challenged the charging of ledger and ATM fees.

“The new plaintiffs were invited to join the existing case. If they want to raise new matters or present a different case then they should file their own case. To bring in banks that did not exist at the time the suit was filed and to include institutions which are not banks goes beyond the class represented by Ms Wanjiru when the suit was filed,” the bankers say in the response to Ms Wanjiru’s application.

Justice Francis Gikonyo in August allowed 187 customers to join the suit, including controversial businessman Horatius Da Gama Rose.

Mr Da Gama Rose, who is at the centre of a separate case fighting to retain ownership of the controversial 134-acre Karen land valued at Sh8 billion, hopes to use the class action suit to rescue two of his companies that were placed under receivership by Bank of Baroda in 2008.

He reckons that the bank’s action was based on illegal interest rates and penalties he was charged.

READ: Banks want Equity, Family and 3 others dropped from class suit

KBA now claims that 24 of the people listed in the suit are not among the 187 bank customers who were in August allowed to join Ms Wanjiru in her fight against the lenders.

Ms Wanjiru wants to include Equity, Bank of Africa, Guaranty Trust Bank (GTB), Ecobank, UBA, Family Bank, Gulf Africa Bank, Jamii Bora, Housing Finance and Oriental Commercial Bank in the suit.

Lawyer Waigwa Gichuki, who is representing Ms Wanjiru, also wants the court to include future bank customers, meaning customers who open accounts as the case progresses will also be entitled to damages in the event that the court rules in favour of his client.

He argues that since the filing of the suit, new information has come to his client’s knowledge while some information from the original suit needs to be deleted.

“Since the filing of this suit, other information has come to light and requires to be included in the statement of claim. Some information in the plaint also requires to be deleted. It is in the interest of justice that leave be granted as the intended amendments will not prejudice the defendants,” Mr Waigwa says.

But the KBA insists the plaintiffs are trying to use the joinder of new plaintiffs in the suit to change the nature and scope of the case.

KBA also wants the court to determine the dispute using the former Constitution, arguing that the suit was filed before the new laws were promulgated in 2010.

Justice Charles Kariuki, who has since taken over the case, will rule on whether to allow Ms Wanjiru to amend her suit on March 18.

The interest rates battle escalated in October last year after another customer filed a fresh suit seeking compensation for losses he incurred after his bank allegedly levied him unauthorised charges.

Godfrey Paul Okutoyi, who missed a chance to join Ms Wanjiru’s suit in August, has sued the KBA and the Central Bank of Kenya (CBK) seeking compensation for the loss he is suffering from illegal escalation of interest rates.

Mr Okutoyi, who is an Equity Bank customer, argues that commercial banks have the best lawyers and external auditors to advise clients on the risks involved in flouting banking laws.

He also faults the CBK for negligence, arguing that the regulator has failed to take action against institutions violating banking laws.