NAIROBI, Kenya — The National Assembly has received a petition seeking to tighten consumer protection laws and shield borrowers from being charged interest, penalties, and fees that exceed the original amount of their loans.
The petition, filed by lawyer Allen Waiaki Kishore, urges Parliament to amend the Consumer Protection Act and formally codify the “in duplum rule,” which restricts lenders from charging more in interest than the principal borrowed.
National Assembly Speaker Moses Wetang’ula told lawmakers on Tuesday that the petition argues existing safeguards under Section 44A of the Banking Act have failed to protect borrowers.
The law currently provides that interest on non-performing loans stops accruing once it equals the outstanding principal. However, borrowers still face hidden charges, penalties, and debt recovery harassment.
“The petitioner avers that the purpose of the rule is to protect borrowers from exploitation, prevent endless accumulation of interest and encourage fair lending practices,” Wetang’ula said.
Lack of clarity in enforcement
The petition highlights inconsistent judicial rulings on when the rule should apply, whether before or after loan restructuring, and whether penalties and default charges should count as interest.
This ambiguity, Kishore argues, erodes public confidence in Kenya’s financial system and undermines constitutional values such as transparency, accountability, and social justice.
Borrowers, the petition adds, are often subjected to harassment by debt collectors and unfair loan recovery tactics, leaving many trapped in cycles of debt.
To address this, Kishore has asked MPs to:
- Clarify the scope of the in duplum rule, including its application to penalties and other fees.
- Establish uniform mechanisms for debt restructuring and recovery.
- Create avenues for redress, including refunds or settlements for borrowers subjected to unlawful interest charges.
Wider reforms sought
Speaker Wetang’ula confirmed that the matter falls within Parliament’s authority and has since been referred to the Public Petitions Committee for review.
Welcoming the petition, Emuhaya MP Omboko Milemba called for broader reforms targeting not only commercial banks but also unregulated digital lenders and microfinance institutions.
“From what we see, banks and other lending institutions are still very harsh on borrowers, making it difficult for ordinary people in communities to access credit,” Milemba said. “These many mushrooming small financing institutions are giving loans to many Kenyans without seeming to be controlled or checked by law.”
If adopted, the proposed reforms could mark a major step in tightening Kenya’s consumer protection framework and curbing exploitative lending practices in both the formal and informal credit markets.
