Consumer protection diagnostic study - FSD Kenya

36 • CONSUMER PROTECTION DIAGNOSTIC STUDY: KENYA
Type of financial service Problem Data
Too much pressure to sign the loan agreement
right away, across the board
Terms and conditions should be clearly explained
but are not.
Respondents are still surprised by various charges
even for formal institutions.
Respondents are surprised by the repayment
amounts or term length
Not a lot of attempts to restructure loans that have
been defaulted on
There appears to be a common practice of
attaching and auctioning goods in the event of
default, among formal and informal lenders alike.
Respondents, for the most part, believe this is legal
and take it as a matter of course.
10% of the users of formal credit, i.e. bank loans,
MFI, hire purchase, Sacco, are pressured to sign
right away. This is not much worse than 14% of
moneylenders.
6% of bank loan users, 3% of MFI loan users and
7% of Sacco loan users did not have someone
explain the terms of the loan. That is not much
better than an ASCA or money lender, both at 3%.
25% of bank loan users, 18% of MFI loan users,
25% of Sacco loan users, 20% of hire purchase
users are unaware of various changes on loans.
This is quite close to 37% of ASCA users and 40%
of moneylender loans.
More users of formal credit, i.e. bank, MFI, SACCO
(8%-9% of users) were surprised, while only
6% of ASCA and 0% of moneylender users were
surprised.
Data is challenged, but it looks like, of those who
defaulted, a significant number did not try to
restructure their loans.
Qualitative data
Insurance Lots of life insurance being sold 26% of the sample
Details were not explained in writing. 13% of users said details were not explained in
writing.
Respondents were concerned about various
problems they had encountered, from fraudulent
sales by agents to unfair charges.
Long term savings Investments – being sold with a promise of a
certain return.
Qualitative data
30% of users (users are 7% of sample) responded
they are sold with a promise of return.
Pressured to make investment. 15% of users said they were pressured to make
investment.
There seems to be a lack of information about
pensions.
12% of sample are unsure if they will have a
pension; 21% are uncomfortable asking their
employer about their pension; 12% received less
than expected in their pension; most of those asked
their employer; only 17% of those who asked got a
satisfactory answer.