The new mechanism to be launched early next year is aimed at quickly resolving these cases and reducing conflict between the banks and customers.
KBA Chief Executive Officer Habil Olaka observed that currently most of the cases in court take up to three years to resolve, but the new mechanism aims at reducing them up to less than a week.
“KBA is collaborating with all the partners in this industry to set up an arbitration process where both parties in disputes should have confidence in the ability of the arbitrator to be fair. Soon we will see those disputes that cannot be solved at the bank level, being solved here,” Olaka said.
The arbitration process will handled by the association but will ensure proper representation of all stakeholders in the banking and legal sectors.
The association will also conduct training for banks to ensure they are aware of consumer requirements and are equipped to settle disputes internally without escalating to the courts.
“The court process is either lengthy or too expensive. So some of the disputes which can even be resolved at the bank level, take years to solve. And when you have an unresolved dispute between two parties that are in contractual engagement, that’s a very uncomfortable relationship,” he said.
In most cases disputes arise from poor communication on issues to do with terms and conditions related to loans and account operations.
Olaka was speaking during the launch of a consumer guide aimed at bridging the gap between the banks and the banking public.
The guide features basic information on banking including loans and credit facilities, credit information sharing, consumer protection, account operations and bank terms and conditions.
The guidelines are a revision of 2001 document, after most of them became irrelevant due to changes in the banking industry.