Customers press banks to refund Sh2bn illegal levies

The High Court has granted the Standard Chartered Bank and the Central Bank of Kenya 45 more days to retrieve records of hundreds of account holders seeking a refund of levies charged illegally three decades ago.

Justice David Majanja extended the time from the initial 60 days after the two institutions said they needed more days as the records date back to 1989.

In 2003, a customer of Standard Chartered Bank, Ms Rose Florence Wanjiru, sought a refund in form of interest that was charged on her account without the approval of the Finance Minister as it was required by Section 44 of the Banking Act.

She filed the case on her own behalf and on behalf of “all the past, present and future account holders” of 43 different commercial banks from November 1, 1989.

The case is against Standard Chartered Bank Kenya Limited, the Central Bank of Kenya and all lenders under the Kenya Bankers Association (KBA).

Ledger fees

She claimed that the banks had illegally charged ledger fees of Sh100 per month and fees for ATM withdrawals against the customers’ accounts without authority of the Finance Minister.

Court papers indicate that almost 20 million account holders of the member-banks (KBA) were affected. This means the compensation could be in excess of Sh2 billion.

Later in 2015, 187 bank customers joined the case after KBA lost an attempt to have the suit struck out on grounds that Ms Wanjiru had filed the claim on behalf of “an unidentifiable group of people and without their authority”.

The customers, who include borrowers, also want to reverse the alleged wrongs that were committed by the banks and a declaration that all illegal levies charged are refundable to the account holders.

Against the CBK, they want the court to find that it failed in its duty to regulate charges levied by the financial institutions. Justice Majanja took over the case Thursday following the promotion of Justice Francis Tuiyott to the Court of Appeal.

He heard that on May 24, Justice Tuiyott had directed Standard Chartered Bank and CBK to file the documents within 60 days.

But when the case was called for management conference, the banks said they had been able to retrieve only 20 per cent and needed 45 more days to put their house in order.

At the same time, two of the claimants sought to have the dispute referred to mediation for expeditious disposal.

The case will be mentioned on November 26 for confirmation of whether the documents have been retrieved and an update on the proposed out-of-court settlement.

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