Consumer Federation seeks recourse on rate-cap ruling

The Consumer Federation of Kenya (COFEK) has filed an application in court, objecting last week’s High Court directive to scrap off holds on interest earnings from commercial bank lending.

In its application, the consumer federation is bemused of the inclusion of the Central Bank of Kenya (CBK) and the Kenya Bankers Association (KBA) as defendants to the suit highlighting the pairs open and comprehensively documented objection to the rate-cap regime.

COFEK Secretary General Stephen Mutoro says the ruling raises serious integrity questions and sees the petitioner—Bonfas Oduor as party to CBK and KBA interest to suspect a back-door attempt at reigning in a return to expensive loans.

“The whole suit is defective. Our argument is that the petitioner should have sued the National Assembly if he had any serious intent at repealing the rate cap. Ours is to have a total stay and removal of the ruling from the statute,” Mr Mutoro told Citizen Digital in a phone interview.

The consumer lobby further raises the alarm at the manner by which the ruling was made public, where the court chose to make disclose part of the ruling through the press prior to making an official stand on the matter.

Mutoro expects parliament to largely make right the legal provisions deemed as unconstitutional by the courts to assure of the continued stay of interest caps. He however challenges the lack of clarity in the ruling saying the decision does not explicitly state the contravention of the constitution.

“Where is this unconstitutionality that would then prompt parliament into action? If any case there is, why give a 12 month grace period? In effect, the law has been diluted; this ruling is trying to favor banks and their chief executives. We are prepared to take the matter up to the Supreme Court but you can be sure consumers will have the last laugh,” he added.

COFEK has requested parliament to consider the adjournment of house proceedings today to discuss the arising matter in urgency terming it a matter of national importance.

The Consumer federation has from the onset of the capping law in September 2016 sided with the hold on interest earnings terming it as a consumer protection measure against the deemed exploitation of lender’s by commercial banks.

High Court in its ruling on Thursday March 14, 2019 deemed the interest-capping regime as unconstitutional but gave a 12 months stay of the repeal’s execution to grant parliament with the opportunity to align the rate-cap provisions with the law.