Cofek To Appeal Court Ruling Invalidating Interest Rate Cap Laws

Cofek Secretary General Stephen Mutoro. [PHOTO/ COURTESY]

The Consumers Federation of Kenya (Cofek) has said that it will appeal a High Court decision that declared the interest rate capping laws unconstitutional.

The consumer body faulted the judgement terming it as grossly defective, suspect and one that raises serious integrity questions on the part of Central Bank of Kenya (CBK) and Kenya Bankers Association (KBA).

“We intend to appeal to the Court of Appeal against the said judgment to the extent  that the decision by the superior Court found provisions in the Act to be vague imprecise, ambiguous indefinite  and its declaration that Section 33B (1) and (2) of the Banking Act are null and void,’’ the notice by Cofek read.

In the ruling delivered last week, High Court judges Francis Tuiyott, Rachel Ngetich and Jacqueline Kamau ruled that the Central Bank of Kenya (CBK) will continue regulating the rates for 12 months after which the judgement will take effect.

“Mindful of the possible ramifications and disruption on existing contractual relationships between banks and their customers, the court suspended the effect of the declaration for 12 months from the date of this decision to give the National Assembly an opportunity to reconsider the provisions,” the judges ruled.

Read: Court Declares Bank Interest Rate Cap Laws Unconstitutional

Of the sections affected most include section 33B (1) and (2) of the Banking Act which were declared vague for trying to cap income for banks from their customers.

Section 33(B) of the Act was declared discriminatory against banks’ CEOs, for providing a punishment in the event they breached the interest rate caps law.

The petitioner, Mr Boniface Oduor through lawyer Miller Wanjala, said that the parliament overlapped the duties of CBK in determining the maximum interest rates banks should charge on loans.

However, Cofek says that the petitioner does not represent the interests of the customers.

“Indeed it is clear that the petitioner, one Bonface Oduor, does not represent interest of bank customers but those of CBK and KBA,” Cofek said.

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Written by Francis Muli

Senior reporter at Kahawa Tungu, Muli has a passion for human interest stories. Believes in unearthing societal rots that have been hidden from the public eye.
Follow me on Twitter @FmuliKE. Email francis@kahawatungu.com

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