Two weeks ago, I published an opinion on this page highlighting my experience with an erroneous report that was submitted by my bank to the credit reference bureaus (CRBs). The article generated some interesting feedback from some kindred spirits. Augustine M shared as follows: “I have also experienced a similar issue like yours. A standing order that I had closed 5 years ago, but apparently the bank continued to surcharge and penalize for 4 dark years, only came to my attention when I needed that CRB Credit Report. What made me mad was why my bank, which I understand has rights of set-off to enable them recover from your other accounts with them and clear you, goes ahead to issue a damning report. Yet I had all along another well performing loan with the same bank.”
Well dear Augustine, a major assumption that you are making is that your bank has a universal view of your accounts. Whereas you have a universal view of the bank in terms of all the products and services that you are consuming from them, your bank may have as many separate records of you, as there are services you are consuming. These records are in different databases that don’t talk to each other because they are in different departments. Asking your bank to set off from one account to another, well…that’s just asking for too much efficiency. I mean do you know how many internal approvals have to be sought to get that process approved? You’ve got to be kidding man! Now your bank might be a manyanga bank, meaning it has a supercalifragilisticexpialidocious 21st century operating system and therefore your national identity card number can generate a universal view of your accounts. But then it requires someone to initiate that query. And there’s hundreds of thousands of other retail clients like you. Moreover that would require a rather high level of efficiency. So hang tough bro, they’re just not that into you. One more thing: can you imagine the number of negative reports that the CRBs have of ordinary wananchi who have minor charges on accounts that have failed to be closed? And are now dragging a millstone around their creditworthy necks in the name of credit reporting? Another writer Andrew F had this to say:
“Hello Carol, as soon the CRBs were authorized commercial banks submitted 800,000 negative credit reports! Needless to say, the commercial banks neglected to comply with the new law by notifying the 800,000 account holders who were having their credit histories trashed! Too expensive? It really makes no difference; our commercial banks are out of control and our friends and associates **** (edited out as this is a family newspaper) us royally in plain sight. You knew who to contact which only leaves 799,999 others being trashed without legally required notice.”
Dear Andrew: Are you aware of how many Kenyans must have been temporarily employed during the process of issuing 800,000 negative credit reports? During that period, the unemployment levels for the country took a significant dip and the banks were awarded with the highest Pay As You Earn award from our veritable tax collectors. In fact the bigger issue for me is that by ignoring Section 50 (1) (b) of the Credit Reference Bureau (CRB) Regulations 2013, which requires banks to “notify each customer, within thirty days of the first listing, that his name has been submitted to all licensed Bureaus,” the banking industry deliberately scuttled efforts by Postal Corporation of Kenya to grow its profits through sale of regular postage stamps on the 800,000+ reports that should have been mailed out.
Finally, JK weighed in with these words: “Just thought I would point out great article today in Business Daily, the system is absolutely flawed. In South Africa they forced all bureaus to delete all their information and have all banks resubmit because almost the entire country was listed for one reason or another. I was listed because I owed a bank Kshs 200 for not closing my account with them. I’m surprised a class action has taken this long in Kenya.” Dear JK, thanks very much for reaching out to this pained sister. I have tried to research your point about what happened in South Africa and actually found that in 2005 the South Africans published a National Credit Act which stipulates the type of information that credit bureaus can keep on consumers, how the information is obtained, used, and for how long that information may be kept on their records. More importantly, the Act aims to ensure that credit bureaus keep accurate records on consumers. In a bid to cure the mischief of erroneous credit reporting, the Act in Section 72 gives consumers the right to access and challenge information held by a credit bureau. A key extract of that section provides that a consumer can challenge and request proof of the accuracy of information held by a credit bureau. Should a credit bureau fail to provide the consumer with proof of accuracy of information that the consumer disputes, it is compelled to remove the disputed information from its records. The same section also gives the consumer the right to be advised by a credit provider before certain adverse information about that consumer is passed onto a credit bureau and to receive a copy of that information on request. As we often say in Kenya, it’s not a dearth of laws that we suffer from; rather it is the enforcement of existing law that is the problem. The Credit Reference Bureau regulations in Kenya do protect the consumers, but the protection mechanisms are not being enforced by the banks, either through sheer laziness and ineptitude or utter contempt for the impact of their actions. I like that the South African legislation puts the burden of proof for veracity of information on the credit bureau, which means that a layer has been added for ensuring that consumers are protected from lazy bank processes.