The Competition and Fair Trading Commission (CFTC) has fined two commercial banks K300 million after finding them guilty of unfair consumer practices.
The complaints against FDH Bank plc and Standard Bank plc accounted for more than 83 percent of K361 million penalties that CFTC imposed yesterday for unfair consumer practices, misleading conduct and supplying defective products and services.
The enforcement action also resulted in the commission ordering six companies operating in the banking, agriculture, courier, dry-cleaning and real estate sectors to refund consumers more than K126 million.
CFTC said the decisions were made during its 75th meeting which considered 14 cases involving anti-competitive business practices and unfair trading conduct. Three cases were dismissed at a preliminary stage due to lack of merit or early resolution of disputes.
FDH Bank plc received the largest penalty of K200 million after the commission found it liable for misleading conduct, unconscionable behaviour, failing to disclose material information and unfair consumer contracts in a dispute involving a Keyman insurance facility.
The bank was also ordered to reverse a K120 million deduction from a customer’s account and refund additional charges and interest.
On the other hand, Standard Bank plc was fined K100 million after CFTC investigations established that the bank unilaterally extended a customer’s loan tenure from three to five years without disclosing the charges.
CFTC chief executive officer Desmond Kaunda told journalists in Lilongwe yesterday that Standard Bank has since been ordered to write off the loan, refund deductions made after the original loan period and amend the offending contract clause.
Other sanctioned companies included fertiliser supplier Nitro Phos Limited, which was fined K50 million over defective fertiliser linked to crop damage reported by farmers in several districts. CTS Courier Services was fined K5 million over lost parcels, while Modern Dry Cleaners and Urban Realtors Limited were each fined K3 million.
Kaunda said the commission imposed the penalties after adjudicating cases involving anti-competitive business practices and unfair trading conduct.
CFTC chief consumer analyst Augustine Nyirenda said the commission had pushed for reforms after encountering difficulties dealing with cases involving defective services and unfair contract terms under the Competition and Fair Trading Act of 1998.
“One of the key additions to the new law is the prohibition of excluding liability for defective services,” he said.
Nyirenda said the previous law focused largely on defective goods, leaving gaps in the treatment of complaints involving service providers such as couriers and dry cleaners.
He cited the CTS Courier case as one of the new provisions in action, saying consumers now have the right to seek compensation when services fail to meet reasonable standards.
Another major reform, he said, was the introduction of provisions allowing the commission to scrutinise unfair consumer contracts.
The cases provide one of the clearest indications yet of how the Competition and Fair Trading Act of 2024 is expanding consumer protections, particularly in areas such as defective services and unfair contract terms that were not adequately covered under the previous legislation.
Standard Bank plc intermediary Frank Phiri informed The Nation that the bank would not comment on the issue while FDH Bank public relations manager Lorraine Chikhula referred us to an associate who we could not reach by press time.
