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The Nairobian

Family Bank to pay ex-employee Sh1.4m in mortgage dispute

Business

By Winfrey Owino | Nov 29, 2022

Family Bank Towers on Muindi Mbingu Street, Nairobi. [Elvis Ogina, Standard]

The Competition Authority of Kenya has ordered Family Bank to refund an ex-employee Sh1.42m million after wrongfully deducting funds from her account for mortgage settlement in November 2017.

The authority heard that the former employee, as per her agreement with the lender, would qualify for a 20 per cent waiver if she paid her mortgage charges in full.

The employee, according to the Competition Authority of Kenya, resigned from Family Bank in 2016 after serving the lender for 11 years.

The bank said in its defense that the waiver applied only if the employee managed to raise the full amount within her 30 days notice period from the date of submitting her resignation letter and that she'd lose the privilege upon expiry of the notice period.

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The employee offset her mortgage outside of the expiry period and demanded to benefit from the 20 per cent mortgage waiver.

Family Bank, however, said she couldn't benefit from the relief agreement because she had settled her loan outside her notice period.

The bank, according to the Competition Authority of Kenya, went ahead to deduct Sh1.02 million from her account for loan repayment and Sh399,000 for the legal fees incurred by the lender while responding to the suit filed by the ex-employee.

In total, the ex-employee was set back to Sh1.42 million.

The Competition Authority of Kenya, however, found that Family Bank violated the former employee's rights because there was no clause in their agreement stating she'd lose the waiver benefits if she resigned from Family Bank, or if she fully paid her loan outside the legal notice period.

"Refund the 20 per cent waiver on the complainant's facility totaling Sh1,015,804.20, being the discount that would otherwise have been applicable on the loan if settled in full, and refund the complainant Sh399,000 being the excess amount debited from her account to the bank's legal fees as a result of the court proceedings initiated by the complainant," the authority ordered Family Bank in its ruling.

The Competition Authority of Kenya ordered the bank to refrain from such conduct in the future.