Kenya's Central Bank Targets Forced Insurance and Tied Selling of Financial Products

Retail customers in Kenya will no longer be forced to buy additional financial products or services from a bank or its affiliates as a condition for accessing a desired service. This is the core of the Draft Financial Consumer Protection Framework, which the Central Bank of Kenya (CBK) has released for public comment. The Framework establishes unified regulatory standards for fair treatment, transparency, and market conduct supervision across the financial sector. It prohibits financial services providers (FSPs) from making insurance a condition of access to other financial products or services, unless the insurance is required by law, relates to mortgaged property under a credit agreement, provides payment protection for a loan, or is required by a regulator. FSPs are further barred from forcing consumers to use a specific insurer or imposing unfair insurance terms and coverage levels. Financial products may only be sold as a bundle if they are part of a function that cannot work without the other, or if each product in the bundle is available for separate purchase with similar separate terms and clear benefits to the consumer.