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LEGAL ALERT: Digital lenders on the cusp of coming under CBK’s radar with the proposed amendments to the CBK Act.
LEGAL ALERT: Digital lenders on the cusp of coming under CBK’s radar with the proposed amendments to the CBK Act. 150 150 Admin_salclaw

The Central Bank of Kenya (Amendment) Bill 2020 is currently before the National Assembly’s finance committee, with the public participation stage having ended on 11th August 2020. After that, the finance committee will report to the house sitting in plenary on their consideration of the Bill before members of Parliament brace themselves for debating and voting on the same. The Bill aims to arrest the excessive digital lending rates that have entrapped many borrowers and to tame predatory lending. Further, the Bill aims to bring some sanity to the digital lending marketplace as there have been several complaints by members of the public over the unorthodox and humiliating tactics lenders use to pursue debt payment. For example, some lenders contact close family members of the debtors incessantly for them to appeal to the debtors to settle their debt.

A survey conducted by the Star newspaper in 2019 regarding interests charged by some digital lenders in Kenya revealed that a majority of them were charging interest rates as high as 15 percent per month, which translates to an Annual Pricing Rate of 180 percent. This figure is 15 times more than what commercial Banks charge for unsecured loans, with the present average rate being 11.95 percent, according to CBK.

If the Bill is passed, digital lenders will require CBK’s approval to vary their interest rates and to introduce new loan products. While digital lenders do not oppose the idea of regulation, some of them are however, against strict supervision by the CBK as they are not deposit-taking institutions like banks.  Instead, digital lenders consider regulation under the Microfinance Act as a more rational and suitable approach as this law caters for non-deposit taking microfinance institutions.  They also hold that regulation under the Microfinance Act will ensure that digital lenders maintain flexibility in the innovation of loan products as CBK approval will not be required.

 

Written by Edward O. Sudi

edwardsudi@salclaw.co.ke

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Child maintenance proceedings should not be employed to serve ulterior motives against fathers, court rules.
Child maintenance proceedings should not be employed to serve ulterior motives against fathers, court rules. 150 150 Admin_salclaw

The High Court in (JR. 5 of 2020) has ruled that in Child maintenance disputes, courts are supposed to take into account the financial means of both parents to avoid overburdening and arbitrarily purging either of them. This decision was made after a man who had been jailed for a month on account of failing to honour a court order that required him to pay Ksh. 900,000 towards child upkeep, sued to the High Court at Mombasa on the constitutionality and fairness of the process adopted by the magistrates’ Court in issuing the order. In his judgment, Justice Ogola held that the magistrate, who was the first respondent, acted outside the laid down legal procedure by failing to take heed of section 101 of the Children’s Act. Notably, the said section 101 under subsection 4, mandates courts to conduct inquiries pertaining to the financial ability of persons liable for child maintenance to pay the sums of money they owe.

It was revealed that the man had made an application in the trial court to have an inquiry on the parties’ financial position conducted, which was granted. However, before a report on the parties’ financial position could be presented, the trial magistrate went ahead and declared that the man had intentionally ignored and disobeyed a previous court order before committing him to jail. It is this bizarre turn of events that the judge took utmost issue with, adjudging the magistrate’s decision to proceed in the absence of the financial report to have been irregular, unreasonable, and unfair.

Consequently, the judge expunged the orders of contempt and committal and subsequently directed the Magistrates’ Court to conduct a proper investigation into the man’s financial capability in order to reach a fair arrangement regarding the contributions of both parents towards the minor’s care and upkeep without overwhelming either of them.

Written by Edward O. Sudi

edwardsudi@salclaw.co.ke

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YOUR RIGHTS DURING A POLICE INVESTIGATION!
YOUR RIGHTS DURING A POLICE INVESTIGATION! 150 150 Admin_salclaw

Police and the state in general, are empowered to conduct investigations in a bid to solve crime and bring criminals to book. Indeed, members of the public are required to comply with summons requiring their attendance at police stations for the purpose of investigations. Tellingly, failure to honour requisitions for attendance at police stations without a plausible excuse is an offence. Similarly, showing up at a police station and refusing to respond to the questions that may be legitimately asked or untruthfully responding to them amounts to an offence. However, a person is under no obligation to respond to questions that may tend to expose him/her to a criminal charge or penalty. This exemption springs from the constitutional right to refuse to give self-incriminating evidence afforded to a person involved in a criminal inquiry.
Crucially, a police officer who seeks to record a statement from a person against whom a criminal charge may be preferred or who is already facing a criminal charge MUST WARN such a person that the statement they will make may be used as evidence against them. If such a person forfeits their right to remain silent after being warned and moves on to record a statement, then any admissions they make in their statement may be legally used against them in a criminal trial. Although admissions need not be given voluntarily as the Supreme Court observed, confessions, on the other hand, MUST be procured through express consent from the person providing it. To this end, it must be appreciated that despite all confessions being admissions, not all admissions are confessions. The difference lies in the effect either of the two would have in a criminal case.
A confession would automatically return a guilty verdict because it is an express and explicit acknowledgement of guilt by an accused person. Further, there are strict rules to be followed in order for a confession made in a police station to be accepted in court. Conversely, an admission is an acknowledgement by an accused person of a matter (s) relevant to a criminal charge, which may give the impression that the accused is guilty. Since an admission only insinuates that the accused is guilty, it cannot, by itself, be used to render a conviction; other evidence is hence required to support an admission. Therefore, it follows that an incriminating revelation made voluntarily by a suspect or accused person to police officers in the course of investigations would be treated as an admission if such a revelation is not recorded in strict compliance with the Evidence Act so as to be regarded as a confession under law. This position, which was reiterated by the Supreme Court, is an effort to strike a balance between the rights of persons under a criminal inquiry, and the rights of the public to peace and security . So that, the constitutional mandate of security agencies to maintain/restore peace and security is not hampered by the rights of persons under criminal inquiry, and vice versa.

Way forward: It is best for any person subjected to police investigations, who fears that the information they may disclose will cast them in the bad light of being viewed as the culprits, to choose to remain silent on that aspect.

Prepared by Ochwaya E. Sudi
Advocate of the High Court of Kenya

Edwardsudi@salclaw.co.ke

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