Consumer protection diagnostic study - FSD Kenya

28 • CONSUMER PROTECTION DIAGNOSTIC STUDY: KENYA
Chapter 12
COnSUMeR aDVOCaCy, aWaReneSS anD
eDUCaTIOn
Measures to improve financial consumer awareness and education will be a
critical component of any consumer protection regime in Kenya. Consumers
need a basic level of financial literacy and sufficient understanding of their
rights and responsibilities to interpret contractual terms and conditions,
to recognize unfair practice, and to make effective use of recourse channels
when necessary. For the majority of the population that uses unsupervised
or informal financial services, their own knowledge will be their only reliable
defence against services that are unaffordable, deceptive, abusive or outright
fraudulent. Over time it is also necessary to improve the capacity of Kenya’s
nascent consumer advocacy organisations, as these can play a useful role
in pushing for effective implementation of financial consumer protection
measures and help identify and address problems in the market.
The consumer research revealed key gaps in consumer awareness and financial
capability. As noted, the FinAccess 2009 survey found that only 37% of
respondents could correctly solve two basic math problems. The rapid spread
of pyramids is yet another indication that a large portion of the population
may not readily identify fraud schemes.
In the FSD/CGAP 2010 research, many consumers said they were aware of key
information about their providers and products; they thought they understood
it up-front but were then surprised at the actual product features (e.g., charges)
and practices. Their knowledge of their rights was often incomplete and they
expressed confusion or lack of confidence about addressing certain problems.
The boxed quote typifies this situation. FGD respondents were not always clear
whether their problems had a legal basis and whether they had something
legitimate to complain about, let alone to whom they could complain.
12.1 CURRENT INITIATIVES
Focus group respondent
“I think we are lacking some information, like [I] don’t know if I am
wronged by a bank or micro finance [institution] . . or if there is any set
mechanism which can follow up things on my behalf.”
Man from Eldoret
The Financial Education and consumer Protection Program (FEPP) is the
public-private partnership formed to drive implementation of financial
education and consumer protection initiatives and eventual development of
a comprehensive national strategy. The 2008 FEPP scoping study 52 surveyed
existing initiatives, identified priorities and examined initial pilot activities to
identify cost-effective measures in the Kenyan context.
For example, the IRA uses FM stations to educate consumers on features of
insurance products and the CBK has activities to raise awareness about deposit
52 Nelson, Candace and Wambugu, Angela, Financial Education in Kenya, FSD Kenya, August 2008.
safety. The RBA has undertaken numerous consumer awareness drives countrywide
to encourage employees (including those in the informal sector) to take
up pension products. FSD is supporting a pilot project to relay financial literacy
messages through a TV soap opera dubbed “Makutano Junction.” One recent
episode generated over 2000 requests for a family budgeting template in less
than half an hour, and another that featured money lost to a pyramid scheme
created a similar response.
Faulu Kenya, Post Bank, Co-operative Bank and Equity Bank are among
the financial service providers that have initiatives in financial education to
increase their customers’ knowledge and skills. Equity Bank has established
a call centre which is advertised through plasma screens in banking halls,
leaflets, face-to-face communication with customers, and the ATM network
including bold-face notices on ATM cards. Safaricom/M-PESA’s call centre
is another example of a large scale mechanism for providing information to
customers. Many observers assert that technology-assisted awareness efforts
could help bridge the gap. Real-time POS messages or SMS texts at the point
of transaction, for example, could remind consumers to protect their PIN or
obtain a receipt. An independent call-in line or SMS text service could answer
consumers’ queries about the new price disclosure regime and help them
compare loan options.
Civil-society activity in the consumer advocacy and education sphere is nascent
and under-resourced. The Consumer Information Network of Kenya (CIN) was
founded in 1994. It is a member of Consumers International, an umbrella
organisation of consumer associations around the world. It has three regional
offices and is headquartered in Nairobi. The main activities are campaigning
and lobbying, providing consumer advice, and publishing. CIN represents
consumer interests in a number of boards or committees, including Kenya
Bureau of Standards and the trade policy review with the National Committee
on World Trade Organisation. The association has also raised some grants and
receives some indirect government support. 53 This organisation does not have
a legal desk and can therefore not support consumers in litigation.
CIN offers consumers assistance with seeking recourse with their service
provider. CIN reports that it first tries to understand the nature of the complaint
and whether consumer rights have been breached. CIN then contacts the
service provider to understand their view of the matter. If matters cannot be
settled this way, the association contacts the regulator. The association advises
consumers to first try to settle the complaint with the provider in question.
CIN has expertise mainly in the areas of food safety, health and trade. However,
they received 1,251 complaints from financial consumers in 2009.
53 The website of the association is www.consumerupdate.org