In 2024, Parliament passed the new Competition and Fair Trading Act that established the Competition and Fair Trading Commission (CFTC) to regulate, control and prevent acts that have the potential to distort competition and frustrate fair trading in the country.
The law sets out to encourage competition in the economy by prohibiting anti-competitive trade practices, regulating monopolies and concentrations of economic power, protecting consumer welfare, strengthening the efficiency of production and distribution of goods and digital products and services. In general, it is more progressive piece of legislation than its now repealed predecessor enacted in 1998.
Under the new law, the commission is now empowered to impose monetary penalties on offenders. Why is this provision important?
What quickly comes to mind is the 2023 case where Airtel Malawi plc challenged in court a K2.1 billion CFTC fine for breaching the Act in relation to a customer loyalty bonus programme.
Moved by Airtel Malawi’s application, the High Court of Malawi Commercial Division reversed the order because the law did not provide for such monetary penalties.
In the new law, a business entity found in breach will now be sanctioned 10 percent of its gross annual turnover while an individual risks a penalty equivalent to five percent of gross income.
Further, the new law empowers the High Court to enforce the commission’s orders, a move that has given the commission teeth to bite and have its decisions as binding.
Earlier this week, CFTC unleashed the new law and imposed fines on several businesses, including two commercial banks, FDH Bank plc and Standard Bank plc for engaging in practices deemed to be in violation of the rights of consumers.
The complaints against FDH Bank plc and Standard Bank plc accounted for more than 83 percent of K361 million penalties that CFTC imposed for unfair consumer practices, misleading conduct and supplying defective products and services. The two banks were collectively fined K300 million with FDH Bank accounting for K200 million and Standard Bank the remaining K100 million.
Misleading conduct, unconscionable behaviour, failing to disclose material information and unfair consumer contracts topped the list of complaints against the banks and other players fined this week.
In my view, though, poor communication and negligence is the root cause of most violations and hopefully the errant corporates and others will draw lessons from this action. Next, they should develop or revisit their communication strategies, set benchmarks regarding response time to customer enquiries as the prevailing situation where customers are treated as beggars of some sort when they seek information leaves a lot to be desired.
Cases abound of customers of some service providers getting no feedback from the assigned contacts. Customers shouldn’t be assisted because they know a “biggie” in the institution, it doesn’t reflect well and disadvantages those without “connections”.
It is relieving that the new law has brought on board service providers. If the provisions are anything to go by, the consumer is now in safe hands. What they need to do is to know where to lodge their complaints, do not suffer in silence as your action will go a long way in improving service delivery.
Now that the new law is in place, the CFTC needs to be well equipped with financial and human resources for effective monitoring and inspection to ensure accountability among service providers.
Unfair business or trading practices should have no room anywhere. I commend the consumers who stood up and refused to be trampled on by formally lodging their complaints.
Businesses can draw lessons from one of my favourite Lions Clubs International Code of Ethics which provides guidance on ethical behaviour across various life spheres: “To remember that in building up my business it is not necessary to tear down another’s; to be loyal to my clients or customers and true to myself.”
Talking about the fines, on a lighter note, upon noting the figures, I asked myself what relief do the individual complainants get as “a cut” from the total fine? Is the CFTC being fair itself in getting the fines wholesale at the expense of my complaint? At least the customer in the Standard Bank case, who had their loan repayment period unilaterally extended without communication, will have it written off and get a refund of deductions beyond the initial contract as per the CFTC order.
