The Competition Authority of Kenya (CAK) fined Guaranty Trust Bank Kenya Limited (GT Bank) Sh33.18 million for engaging in false representation and unconscionable conduct against one of its customers, ASL Limited.
In addition to the financial penalty, CAK has directed the lender to refund Sh13,211,285 to ASL, funds the regulator determined were improperly levied as default charges.
The regulator said investigations began on October 5, 2024, after ASL lodged a formal complaint accusing the bank of unfair treatment in the management and renewal of its credit facilities.
ASL had maintained a banking relationship with GT Bank since 2001, holding multiple credit facilities including overdrafts, letters of credit, guarantees, asset financing and working capital support.
According to CAK, the dispute arose in 2022 when the bank declined to renew ASL’s facilities upon expiry but allegedly failed to provide a definitive explanation for the decision.
In June 2023, the bank offered ASL a three-month extension to allow finalisation of the renewal process. ASL accepted revised conditions, including providing additional security, reducing one trading line from USD 5.5 million to USD 3.5 million, and retaining cleared collateral.
However, CAK noted that a month later the bank reduced the offer letter by USD 3 million, prompting ASL to seek alternative financing from I&M Bank.
GT Bank subsequently issued a formal default notice and charged the company Sh13.2 million in default interest, allegedly backdated to August 2023 when renewal discussions had commenced.
While the bank reportedly offered to refund Sh2.8 million, ASL rejected the partial reimbursement and pursued a full refund through the regulator.
Upon reviewing the evidence, CAK determined that GT Bank violated Section 55(a)(ii) of the Competition Act, which prohibits false or misleading representations in trade.
“Upon analysing the evidentiary information, the Authority determined that GT Bank violated Section 55(a)(ii) of the Competition Act on false or misleading representation,” CAK said in a statement.
The bank denied allegations of coercion, maintaining that ASL’s failure to execute the July 2023 offer triggered contractual default provisions and that the default interest was not backdated.
The ruling reinforces CAK’s growing oversight role in protecting consumers and businesses from unfair market practices, particularly within Kenya’s banking sector.
The decision also signals increased regulatory scrutiny on how financial institutions manage credit renewals, apply default charges, and communicate contractual changes to customers.
