MANDATORY NOTICE PRIOR TO NEGATIVE CREDIT LISTING UNDER KENYAN LAW

Under Regulation 26(1) of the Banking (Credit Reference Bureau) Regulations, 2020, all banks and financial institutions licensed by the Central Bank of Kenya (CBK) are legally required to issue a mandatory written notice of at least thirty (30) days to a customer prior to submitting any negative credit information to a licensed Credit Reference Bureau (CRB).

This notice must:

• Clearly inform the customer of the intended listing;
• Give them an opportunity to rectify, dispute, or make payment arrangements before adverse listing occurs;
• Be served and documented, with the burden on the reporting institution to prove that proper service of the notice was effected.

This regulation is not merely procedural—it is a statutory obligation, anchored in both financial consumer protection law and constitutional rights.

 Connection to the Constitution – Article 47: Right to Fair Administrative Action

The requirement for prior notice aligns directly with Article 47 of the Constitution of Kenya (2010), which guarantees every person the right to fair administrative action that is:

• Lawful,
• Reasonable, and
• Procedurally fair.

Listing a customer negatively on a CRB has serious consequences, including restricted access to credit, reputational harm, and even job-related issues in some sectors. As such, failure to provide notice before CRB listing amounts to unfair administrative action, and may be challenged through judicial review or complaints to the Central Bank.

Further Procedural Safeguards – Regulations 26(3) to 26(8):

These sub-regulations set out the rights of customers and the duties of banks/CRBs in the event of disputes or inaccuracies in credit reporting:

1. Right to Dispute: Customers can lodge a complaint with the CRB or the reporting institution if they believe the negative listing is inaccurate or unfair.
2. Obligation to Investigate: Upon receiving such a complaint, the CRB must, within 14 days, investigate and suspend the listing during this period.
3. Duty to Correct or Remove: If found inaccurate, the CRB must correct or remove the data and inform the customer accordingly.
4. Right to Notification: Customers must be informed of the outcome of the investigation and any action taken.

This system ensures transparency, accountability, and procedural fairness—principles that are key pillars of Kenya’s administrative law framework.

Legal Consequences for Non-Compliance

Banks or institutions that list customers without serving proper notice or fail to follow the dispute resolution procedures may be in violation of both the CRB Regulations and Article 47 of the Constitution. Affected customers may:

• File a complaint with the Central Bank of Kenya,
• Lodge a petition or judicial review application in the High Court, or
• File a claim for damages under constitutional or consumer protection law.

Summary

In summary, the requirement under Regulation 26(1) of the CRB Regulations, 2020 is not optional—it is a legally enforceable obligation that protects consumers from unfair credit reporting. This obligation is rooted in Kenya’s constitutional guarantee of fair administrative action (Article 47) and is further reinforced by the detailed procedures in Regulations 26(3) to 26(8), which promote accuracy, fairness, and due process in the credit reporting system.

 

Disclaimer: This article is for informational purposes only and does not constitute legal advice.