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Regulator probes bank mortgages, online shops

By Frankline Sunday | June 2nd 2021

Competition Authority of Kenya Director General Wang'ombe Kariuki and Policy and Research Director Adan Wario when they appeared before the National Assembly Communication, Information and Innovation Committee on an inquiry into legislative and regulatory gaps affecting competition in the telecommunication sub-sector.[Boniface Okendo,Standard]


The Competition Authority of Kenya (CAK) has launched a probe into whether the terms and conditions set by financial service providers on Mortgage loans are exploitative to borrowers.

This comes on the backdrop of new data by the Central Bank of Kenya (CBK) indicating the value of mortgage loans in the country fell by Sh5 billion last year to Sh232 billion on the back of the economic disruption from Covid-19.

According to its latest annual report, CAK has listed the probe into banks on unconscionable terms and conditions in contracts as one of the key investigations the regulator is currently undertaking. “The focus is on investigations where there are unconscionable aspects in mortgage contracts by banks to their customers,” said CAK in its report.

Section 56 of the Competition Act makes it an offence for a person or business trading in the supply of a good or service to engage in conduct deemed unconscionable.

This includes instances where customers are required to comply with conditions considered unreasonable or where they were unable to understand documents relating to the supply of the good or product.

CAK will also be investigating whether any undue influence or pressure was exerted or any unfair tactics used against customers and whether the pricing is competitive compared to other suppliers.

The inquiry by regulators to look at the pricing offered by commercial banks on specialised products and could see a review of mortgage costs in the sector.

Data from the CBK indicates that about 74.5 per cent of mortgage loans in Kenya are offered by just six institutions as of December 2020.

“There were 26,971 mortgage loans in the market in December 2020 down from 27,993 in December 2019,” stated the CBK in its report. “This was a decrease of 1,022 mortgages. The decrease was mainly due to repayments and fewer mortgage loans advanced due to the effects of the Covid-19 pandemic.”

CAK has also launched an investigation into unfair commission charges by Glovo, Jumia and Uber Eats under sections 12 and 24 of the Competition Act, 2019.

“The Authority received a complaint from Chris Wings against Glovo, Jumia and Uber Eats on allegations that the accused were offering unfair trading conditions amongst different players in the market,” said CAK in its report.

CAK further said there is a need to safeguard against the rise of monopolies in the e-commerce sector as more consumers change their shopping patterns.

"This may entrench the dominance of some players while increasing distrust among and complaints by consumers," said the regulator.

"This will call for our enhanced surveillance, market research and inquiries as well as a judicious enforcement action."

Drug manufacturers recorded the largest number of restrictive trade practices, with 30 per cent of cases last year coming from the sector, followed by ICT and public procurement sectors. “The greatest percentage of the investigations were in the manufacturing markets segment,” stated the CAK in its report.

Overall, the number of finalised merger transactions last year fell by 14 per cent to 121, down from 141 in 2019 and 148 in 2018.

CAK attributes this to new reporting standards for mergers among small and medium enterprises and multinationals as well as economic downturn due to Covid-19.

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