The institutions were fined for making misleading representations on loans issued to their customers.
The Competition Authority of Kenya (CAK) has fined Harambee Sacco, one of the biggest societies in Kenya by client deposits, and Faulu Microfinance Bank for making misleading representations on loans issued to their customers.
In a notice published in the Kenya Gazette last Friday, the regulator says it fined the sacco and the microlender Sh38,379 and Sh150,000 respectively for contravening sections of the Competition Act that seek to protect consumers from misleading representations and engaging in unreasonable conduct to secure or maintain customers.
Section 55 (b) (i) of the Act bars insurers and micro-finance institutions from giving false or misleading information on the price of goods and services, while Section 56 (4) compels companies to inform customers of all fees intended to be charged for provision of a service.
The watchdog slapped Harambee Sacco and Faulu with the fines following investigations into separate customer complaints, it revealed in response to queries.
“In the case of Faulu Microfinance, the penalty was 10 percent of the complainant’s loan value of Sh1.5 million. Harambee Sacco was fined seven percent of Sh548,283.60, being the combined loan amount and shares of the complainant,” CAK told the Business Daily.
The Act empowers the regulator to impose a financial penalty of up to 10 percent of the value of sales of the goods or services under investigation.
In the two cases, the complainants were restituted through reversal of the effects of the infringements effected by Faulu and Harambee Sacco. Further, the parties committed to cease engaging in any conduct that contravenes the Competition Act.
Harambee Sacco draws its membership from police, the military and provincial administration personnel. Faulu, among Kenya’s tier-one microlenders, is controlled by South Africa’s Old Mutual Group.
The CAK’s latest fines come barely a year after the competition watchdog fined Artcaffe Coffee and Bakery Limited Sh79,079 last November for giving false information to a customer. It also comes as the watchdog steps up efforts to police businesses and service providers accused of exploitation.
In its latest annual report, CAK said it flagged several advertising firms that had colluded to fix minimum prices on ads.
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