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<ul><li>2 ND  ANNUAL AFRICA DIALOGUE FOR CONSUMER PROTECTION CONFERENCE Arusha Tanzania July 12 th  – 14 th   2010 </li></...
<ul><li>Background  </li></ul><ul><li>Legal provisions for CP in Kenya </li></ul><ul><li>CP institutions in Kenya  </li></...
<ul><li>Background </li></ul><ul><li>No Consumer Law in Kenya. CP bill 2007 flopped in parliament  </li></ul><ul><li>Exist...
<ul><li>Current Constitution fail to guarantee Consumer rights to  Basic Education, Food, Health, Shelter, Water and Infor...
<ul><li>Hope  is the proposed new constitution for Kenya.  </li></ul><ul><li>Under the  bill of rights article 46 of the p...
<ul><li>Consumer Rights are re-enforced by the Social and Economic Rights :  </li></ul><ul><li>Where  Article “43. (1)   o...
<ul><li>The Sale of Goods Act </li></ul><ul><li>Contains clauses for CP and UTP in Consumer transactions.  </li></ul><ul><...
<ul><li>Are established under  various Acts in Kenya  </li></ul><ul><li>Have sections for CP. </li></ul><ul><li>With provi...
<ul><li>A statutory organization of Government,  established by an act of parliament Chapter 496, in 1974.  A std body. </...
<ul><li>The drug regulatory authority established under  the Pharmacy and Poisons Act, Chapter 244 of the Laws of Kenya. <...
<ul><li>CCK established in February 1999 by the  Kenya Communications Act, 1998 ,  </li></ul><ul><li>License and Regulates...
<ul><li>Has consumer affairs division empowering consumers through education and provision of requisite information.  </li...
<ul><li>A department of the Ministry of Finance was established by  Monopolies and Price Control Act, Cap 504 of the Laws ...
<ul><li>A Public body established by the President in June 2007; vide gazette notice no.5826 of June 29th 2007 & no. 6327 ...
<ul><li>Banking Act: </li></ul><ul><li>Co-operative Societies Act </li></ul><ul><li>Capital Markets Act </li></ul><ul><li>...
State of play Identified gaps Prudential regulation CP is contained in the regulation and supervision of  financial instit...
State of play Gaps  Prudential regulation New framework Weak institutions  Eventual competition stress No regulations of u...
State of play Gaps  Prudential regulation No formal prudential regulation, but supervised by the CBK and CCK No regulation...
<ul><li>Regulation: Insurance Act offers extensive CP provisions; Commissioner has wide powers to enforce CP and decide on...
<ul><li>Regulation:  Capital Markets Act offers extensive CP provisions,  </li></ul><ul><li>CMA  mandate for orderly, fair...
<ul><li>Retirement benefits sector regulated by RBA. </li></ul><ul><li>RBA  has explicit objective to protect members;  ha...
<ul><li>Non-explained charges for accounts opened  </li></ul><ul><li>Terms and conditions, means of handling defaults not ...
<ul><li>1. Embed CP in various sector acts </li></ul><ul><li>2.Under  Transparency and disclosure we need </li></ul><ul><l...
<ul><li>No CP Law,  </li></ul><ul><li>Lack of strong consumer lobby organizations and serious institutions on CP issues </...
<ul><li>Limited awareness on consumer rights . </li></ul><ul><li>Lack of objectivity  to consumer welfare by most of stand...
<ul><li>The problem with the criminal justice system, filing and treatment of offenders </li></ul><ul><li>Black sports-Sub...
<ul><li>Enhanced enforcement of existing CP legislations  </li></ul><ul><li>Intense  lobbying for the CP law in Kenya. </l...
<ul><li>Repealing retrogressive legislation e.g. “goods once sold will not be accepted”  </li></ul><ul><li>Intense awarene...
<ul><li>CONTACT:  </li></ul><ul><li>Daniel Asher Consumer Unity & Trust Society -Africa Resource Centre (CUTS-ARC), Nairob...
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Overview of consumer protection and financial issues in kenya by daniel asher cuts, arc nairobi

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CONSUMER PROTECTION AND FINANCIAL ISSUES IN KENYA BY DANIEL ASHER

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Transcript of "Overview of consumer protection and financial issues in kenya by daniel asher cuts, arc nairobi"

  1. 1. <ul><li>2 ND ANNUAL AFRICA DIALOGUE FOR CONSUMER PROTECTION CONFERENCE Arusha Tanzania July 12 th – 14 th 2010 </li></ul><ul><li>By </li></ul><ul><li>Mr. Daniel Asher </li></ul><ul><li>Programme Officer </li></ul><ul><li>CUTS Africa Resource Centre, Nairobi </li></ul><ul><li>[email_address] </li></ul><ul><li>www.cuts-international.org </li></ul>
  2. 2. <ul><li>Background </li></ul><ul><li>Legal provisions for CP in Kenya </li></ul><ul><li>CP institutions in Kenya </li></ul><ul><li>Financial Framework Legal Pillars in Kenya </li></ul><ul><li>CP issues in the financial institutions </li></ul><ul><li>Summary of CP Financial Issues in Kenya </li></ul><ul><li>Quick wins for CP in financial sector </li></ul><ul><li>CP challenges in Kenya </li></ul><ul><li>Recommendations. </li></ul>
  3. 3. <ul><li>Background </li></ul><ul><li>No Consumer Law in Kenya. CP bill 2007 flopped in parliament </li></ul><ul><li>Exist scattered pieces of CP legislation which are generally referred to as the “toothless” i.e. No or lenient penalties. </li></ul><ul><li>The existing institutions and agencies are either lacking in resources- </li></ul><ul><li>-Both human and capital, political will ,industry influence, corruption. </li></ul><ul><li>CP their secondary objective </li></ul>
  4. 4. <ul><li>Current Constitution fail to guarantee Consumer rights to Basic Education, Food, Health, Shelter, Water and Information among others . </li></ul><ul><li>Article 79 of the Present Constitution of Kenya guarantees the freedom of expression, which entail: </li></ul><ul><li>Freedom to receive ideas and information without interference, </li></ul><ul><li>Freedom to communicate ideas and information whether the communication is to the public generally or to any person or class of persons. </li></ul>
  5. 5. <ul><li>Hope is the proposed new constitution for Kenya. </li></ul><ul><li>Under the bill of rights article 46 of the proposed Kenya’s new constitution give provision for Consumers right to: </li></ul><ul><li>goods and services of reasonable quality; </li></ul><ul><li>information necessary for them to gain full benefit from goods and services; </li></ul><ul><li>protection of their health, safety, and economic interests; </li></ul><ul><li>compensation for loss or injury arising from defects in goods or services. </li></ul><ul><li>Empowers parliament to enact legislation to provide for CP and for fair, honest and decent advertising for goods and services offered by public entities or private persons. </li></ul>
  6. 6. <ul><li>Consumer Rights are re-enforced by the Social and Economic Rights : </li></ul><ul><li>Where Article “43. (1) of proposed constitution Guarantee every person the right — </li></ul><ul><li>To highest standard of health vis-à-vis health care services, and reproductive health care; </li></ul><ul><li>accessible and adequate housing, </li></ul><ul><li>reasonable standards of sanitation; </li></ul><ul><li>freedom from hunger: adequate food of acceptable quality; </li></ul><ul><li>clean and safe water in adequate quantities; </li></ul><ul><li>social security; </li></ul><ul><li>education. </li></ul><ul><li>Article 43(2) a person shall not be denied emergency medical treatment. </li></ul><ul><li>Article 43(3) The State shall provide appropriate social security to persons who are unable to support themselves and their dependants. </li></ul>
  7. 7. <ul><li>The Sale of Goods Act </li></ul><ul><li>Contains clauses for CP and UTP in Consumer transactions. </li></ul><ul><li>Provide implied conditions and warranties that must exist in every sale of goods contract. </li></ul><ul><li>description of the goods, quality of the goods and warranties are covered in the Act; only safe goods should be put on sale while misleading advertisements and price indications are not permitted. </li></ul><ul><li>Biased to the seller. Cover seller’s right to sell </li></ul><ul><li>The Kenya’s anti counterfeit Act 2008 </li></ul><ul><li>Protection against counterfeit and substandard goods </li></ul><ul><li>Biased towards protection of IP rights rather than CP </li></ul><ul><li>Facing resistance in terms of its implementation. </li></ul><ul><li>-Court’s suspension of Anti-Counterfeit Agency’s powers over importation and distribution of medicines in Kenya on the basis of ambiguity in the definition of counterfeit drugs which seem to cover the generic drug making up 90 percent of medicines consumed in Kenya. </li></ul>
  8. 8. <ul><li>Are established under various Acts in Kenya </li></ul><ul><li>Have sections for CP. </li></ul><ul><li>With provisions for consumer representation within their boards. </li></ul><ul><li>Have other primary objectives apart from CP . </li></ul><ul><li>CP a secondary objective with limited implementation; </li></ul><ul><li>Food safety and control agencies in Kenya complements the basic laws for food safety namely: </li></ul><ul><li>-Food Drugs and Substances Act Cap 254 </li></ul><ul><li>and the Public Health Act Cap 242, whose common goal is to safeguard the health of the consumer. </li></ul>
  9. 9. <ul><li>A statutory organization of Government, established by an act of parliament Chapter 496, in 1974. A std body. </li></ul><ul><li>Part of mandate is to ensure CP through handling of consumer complaints. </li></ul><ul><li>Mission to provide internationally recognized standards, measurements and conformity assessment solutions that meet consumer needs. </li></ul><ul><li>Standardization by KEBS is to provide solutions to repetitive consumer problems in the industry by providing uniformity in products and or services. </li></ul><ul><li>KEBS has not ensured that only quality goods gain entry into the country as provided for in the standards Act cap 496, laws of Kenya and the quality import order No. 78 of July, 2005 . </li></ul><ul><li>Proliferation of substandard goods through illegal cross border trade. </li></ul><ul><li>KEBS in few towns in Kenya with few personnel </li></ul><ul><li>CP not primary objective . Focuses on standards development with limited capacity for standard enforcement. </li></ul>
  10. 10. <ul><li>The drug regulatory authority established under the Pharmacy and Poisons Act, Chapter 244 of the Laws of Kenya. </li></ul><ul><li>objective to - standards of safety, efficacy and quality for all drugs, chemical substances and medical devices, locally manufactured, imported, exported, distributed, sold, or used to ensure the CP as envisaged by the laws regulating drugs in force in Kenya. </li></ul><ul><li>The Board’s Pharmacovigilance department does routine post market surveillance on all medicines in the country. </li></ul><ul><li>But Little achievement on CP </li></ul><ul><li>Prevalence of Fake drugs in the country. </li></ul><ul><li>drug shortages; people resort to shops with high incidence of substandard drugs. </li></ul><ul><li>Pharmacy and Poison’s Board and KEBS are yet to curbing spread of counterfeit and substandard drugs. </li></ul>
  11. 11. <ul><li>CCK established in February 1999 by the Kenya Communications Act, 1998 , </li></ul><ul><li>License and Regulates telecommunications, radio communication and postal services in Kenya. </li></ul><ul><li>Sections 23 and 47 of the Kenya Communications Act of 1998 , ensure access to communications services in Kenya. </li></ul><ul><li>protect Consumers in respect to prices ,quality and variety among other responsibilities. </li></ul><ul><li>CCK focused on creating a well-informed consumer of communication services. </li></ul>
  12. 12. <ul><li>Has consumer affairs division empowering consumers through education and provision of requisite information. </li></ul><ul><li>The division handles consumer complaints and disputes, review regulations on CP and undertake reviews of consumer contracts and service level agreements and provide advice to consumers. </li></ul>
  13. 13. <ul><li>A department of the Ministry of Finance was established by Monopolies and Price Control Act, Cap 504 of the Laws of Kenya </li></ul><ul><li>Responsible for competition and fair-trades issues. </li></ul><ul><li>The new 2009 competition bill will substantially augment CP by re-defining the roles of the Competition Authority. </li></ul><ul><li>New tasks to MPC include ensuring adequate product information and safety standards through surveillance, investigation, warnings and imposition of penalties. </li></ul><ul><li>The bill provides for consultation by Competition Authority and KEBS in all matters involving definition, specification and grading of goods </li></ul><ul><li>section 68 of the bill asserts entitlement of consumer bodies to notify the Competition Authority of infringements that may be subject to investigations. </li></ul>
  14. 14. <ul><li>A Public body established by the President in June 2007; vide gazette notice no.5826 of June 29th 2007 & no. 6327 of 13th July 2007. </li></ul><ul><li>mandated to receive, register, sort, classify and document all complaints against public officers in Ministries, Parastatals/State Corporations, Statutory Bodies or any other public institution </li></ul>
  15. 15. <ul><li>Banking Act: </li></ul><ul><li>Co-operative Societies Act </li></ul><ul><li>Capital Markets Act </li></ul><ul><li>Retirement Benefits Act </li></ul><ul><li>Insurance Act </li></ul><ul><li>Building Societies Act </li></ul><ul><li>Microfinance Act </li></ul><ul><li>Hire Purchase Act, among others </li></ul><ul><li>Statistics Act: provisions on data confidentiality </li></ul><ul><li>Case law: disclosure of affairs of bank customer only in certain instances </li></ul><ul><li>Restrictive Trade Practices, Monopolies and Price Control Act (1990) applies to all sectors of economy. Act is under Ministry of Finance </li></ul>
  16. 16. State of play Identified gaps Prudential regulation CP is contained in the regulation and supervision of financial institutions. Banking Act protect depositors against misleading advertisement from banking institutions Under section 51 . (1) CP not clear in CBK mandate and not explicitly stated in banking Act Transparency Non-transparent prices, terms and conditions among the players No regulation on uniform standards Recourse Banks have internal mechanism to handle complains. <ul><li>No specific regulation, </li></ul><ul><li>No public reporting, </li></ul><ul><li>No independent recourse beyond individual institution </li></ul><ul><li>Limited consumer awareness of rights. </li></ul>KBA has recourse mechanism
  17. 17. State of play Gaps Prudential regulation New framework Weak institutions Eventual competition stress No regulations of unlicensed SACCOS Recourse There exist internal and industry mechanisms No specific regulation No public reporting No independent recourse mechanism Limited consumer awareness of rights Transparency No transparent prices, terms and conditions. No regulation on uniform disclosure
  18. 18. State of play Gaps Prudential regulation No formal prudential regulation, but supervised by the CBK and CCK No regulation of mobile money services Transparency Good industry practice No regulation Recourse No other mechanism beyond internal procedures No independent recourse mechanism
  19. 19. <ul><li>Regulation: Insurance Act offers extensive CP provisions; Commissioner has wide powers to enforce CP and decide on small cases;but more effective enforcement needed </li></ul><ul><li>Serious consumer thugery by insurance companies with tedious court cases. </li></ul><ul><li>Tidious and unwillingness to compensate losses </li></ul><ul><li>Intermediaries need regulations, minimum standards </li></ul><ul><li>Consumers have poor image of industry based on slow claims processing, agents malpractices, insurer insolvencies </li></ul><ul><li>Transparency: unclear contracts, terms, pricing unclear </li></ul><ul><li>Recourse: consumer can complain to IRA, alternatives </li></ul>
  20. 20. <ul><li>Regulation: Capital Markets Act offers extensive CP provisions, </li></ul><ul><li>CMA mandate for orderly, fair, efficient, safe markets; protects investors from failed brokers; has wide powers to enforce CP and prosecute offenders. </li></ul><ul><li>Extensive regulations exists, need effective enforcement </li></ul><ul><li>But Many Complaints: </li></ul><ul><li>Malpractices by brokers, failure to execute orders, trading on client accounts, IPO refunds , Unregulated investment schemes (pyramids )- consumers lossing money in pyramid schemes; Consumers challenged in ability to identify pyramid schemes; </li></ul><ul><li>Transparency: exist extensive disclosures in contracts </li></ul><ul><li>Recourse: extensive complaints handling, alternatives Suggestion for CMA to license investment schemes seeking to raise money from the public for investments; requirement to seek a license </li></ul>
  21. 21. <ul><li>Retirement benefits sector regulated by RBA. </li></ul><ul><li>RBA has explicit objective to protect members; has wide powers to regulate intermediaries; and compensation fund </li></ul><ul><li>Better transparency : in member statements, benefits calculations, </li></ul><ul><li>Limited say by members need more say in schemes, better disclosures </li></ul><ul><li>Recourse: complaints handling by RBA, need alternatives </li></ul>
  22. 22. <ul><li>Non-explained charges for accounts opened </li></ul><ul><li>Terms and conditions, means of handling defaults not explained </li></ul><ul><li>Legality of recovery processes unclear to consumers </li></ul><ul><li>Insurance products have poor image among consumers </li></ul><ul><li>M-Pesa is considered safe, fast, private and terms and charges are very clear </li></ul><ul><li>The banks are doing very little to inform the public about charges, they only talk about advantages, </li></ul><ul><li>Unexplained withdrawal of consumer deposits. </li></ul>
  23. 23. <ul><li>1. Embed CP in various sector acts </li></ul><ul><li>2.Under Transparency and disclosure we need </li></ul><ul><li>Mandatory disclosure of total cost of credit </li></ul><ul><li>Repayment schedule for loan customers </li></ul><ul><li>Plain language agreements (explained to customers) </li></ul><ul><li>3. Recourse Mechanism </li></ul><ul><li>Clear Information to consumers on recourse channels in all agreements & service points </li></ul><ul><li>Telephone, email, SMS contacts for complaints </li></ul><ul><li>Log of complaints, reviewed by regulator </li></ul>
  24. 24. <ul><li>No CP Law, </li></ul><ul><li>Lack of strong consumer lobby organizations and serious institutions on CP issues </li></ul><ul><li>Weak enforcement role by government agencies. 30 Acts of Parliament on standards of goods and services; enforcement is poor,. </li></ul><ul><li>cultural apathy hinder vulnerable consumer towards complaining or voicing opinions in. Kenyans doesn’t speak up creating room for perpetual violation of their consumer Rights. </li></ul>
  25. 25. <ul><li>Limited awareness on consumer rights . </li></ul><ul><li>Lack of objectivity to consumer welfare by most of standards legislations in Kenya. </li></ul><ul><li>Kenya’s anti counterfeit Act 2008 is biased towards protection of intellectual property (IP) rights rather than consumer protection. </li></ul><ul><li>Weights and Measures department in the Ministry of Trade has failed to enforce laws on standards. </li></ul><ul><li>Retrogressive Laws that needs repeal like the cautionary notes on receipts, ‘Goods once sold cannot be returned”. </li></ul><ul><li>Leniency in penalties for violators of consumer rights. </li></ul>
  26. 26. <ul><li>The problem with the criminal justice system, filing and treatment of offenders </li></ul><ul><li>Black sports-Substandard clothes, spare parts, and services like insurance where some agents give incorrect information to policy buyers. </li></ul><ul><li>exploitation on weights. E.g. weights on meat, sugar rice, maize et al. </li></ul><ul><li>Ineffective representation of consumer groups in key institutions with consumer protection mandate limit consumer interest. </li></ul>
  27. 27. <ul><li>Enhanced enforcement of existing CP legislations </li></ul><ul><li>Intense lobbying for the CP law in Kenya. </li></ul><ul><li>Establishment of an umbrella consumer welfare organization in Kenya. </li></ul><ul><li>Effective representation of consumers in various institutions in Kenya </li></ul><ul><li>Enhance capacity development for consumers in terms of their rights and responsibility. </li></ul><ul><li>Advocacy for stiffer penalties to unscrupulous traders </li></ul><ul><li>Consumer organization to intensify their watch dog role over substandard commodities and weighing machines and to work closer with KEBS, </li></ul><ul><li>Weights and Measures department to complement their surveillance role in keeping at bay substandard products. </li></ul><ul><li>awareness campaign on the available consumer protection institutions and redress available in Kenya. </li></ul>
  28. 28. <ul><li>Repealing retrogressive legislation e.g. “goods once sold will not be accepted” </li></ul><ul><li>Intense awareness and consumer education on internet fraud </li></ul><ul><li>Advocacy for reforms in weights and measures department for effectiveness market surveillance role, </li></ul><ul><li>Advocacy for reforms in the criminal justice towards replacement of manual filling system with electronic tools in the judiciary to ease retrieval of data and help to kick out the masterminds of counterfeit drugs trade. </li></ul><ul><li>Strengthening of the Consumer Organisations in Kenya would improve their involvement in general participation in consumer protection activities. </li></ul>
  29. 29. <ul><li>CONTACT: </li></ul><ul><li>Daniel Asher Consumer Unity & Trust Society -Africa Resource Centre (CUTS-ARC), Nairobi Yaya Court- Room No.5, Ring Road Kilimani P.O.BOX 8188-00200 Nairobi, Kenya Ph: +254  20  386 214 9, 386 215 0, 20 232 911 2 Fax: +254-20- 3862149 Mobile: +254 725 913 125/ 733 990 202 Email: [email_address]   Website : www.cuts-international.org </li></ul>
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