Can a Financial Institution or Bank List a Customer With a Credit Reference Bureau Without Prior Notice?
Introduction
In a recent but groundbreaking decision, the High Court sitting at Nakuru asserted that a bank or financial institution has the obligation to give advance notice and duty not to submit information known or reasonably believed to be inaccurate to a Credit Reference Bureau (CRB). In Bank of Africa Kenya Limited v Miano [2026] KEHC 13565 (KLR) the High Court affirmed that the statutory framework provides that a bank is entitled to share credit information but this does not imply that every act of sharing information is automatically lawful. The information must be accurate and in the prescribed procedure.
Brief Facts
Mr. Miano (Respondent) borrowed Kshs. 780,000.00 from the Bank of Africa Kenya Limited with the loan being repayable over a 72-month period through a check-off arrangement with the Respondent’s employer. The bank stated that the employer remitted the installments late making the account to be in arrears. It averred that the first installment was in May 2015 about three months after disbursement. Thereafter, the bank furnished the Respondent’s credit information to Metropol Credit Reference Bureau (Metropol). However, the Respondent claimed that he repaid the loan based on salary deductions and the bank closed his account without informing him. He also stated that he never received any notice about the arrears or the intended listing and only found out that it had been listed when he applied for financing from another institution, Unaitas Sacco. He sued in the Chief Magistrate’s Court at Nakuru seeking a declaration that the listing was unlawful and void ab initio. He also sought its removal, damages, costs and interest. On 28th September 2022, the trial court declared the listing unlawful and awarded him Kshs. 200,000.00 in general damages. The Bank appealed this decision.
Issues for Determination
The issues for determination were:
Whether the bank was entitled to furnish the respondent's credit information to the Bureau, and on what conditions;
Whether the information furnished was accurate, and whether the Bank could shift responsibility to Metropol as a separate legal entity;
Whether the Bank complied with the statutory notice requirements.
Key Holdings
It was found that the right to share a person’s credit information is conditional. It was held that while sharing credit information is not unlawful per se, it comes with certain safeguards. The information must be accurate and the bank must follow rules concerning the sharing of negative information. Particularly, Regulation 25(1) of the Banking (Credit Reference Bureau) Regulations, 2013 requires giving 30 days’ notice to the customer before negative information is submitted. Regulation 25(2) bars a bank from furnishing information it knows, or has reason to believe, is inaccurate. The Court said these rules are not ornamental, that their purpose is to let a customer challenge wrong information before it damages his credit standing.
Further, it was held that a bank that cannot show the pre-listing notice has breached Regulation 25. Here, it was established that a party that claims to have followed a statutory procedure must prove it when the point is disputed. Regulation 25(1) requires notice of the intention to list. It also requires notice after the information has been furnished. Therefore, the Bank could not rely on its duty to report accurate information while ignoring its duty to give notice as the two duties operate mutually.
Moreover, it was found that statutory protection does not protect a party that reports inaccurate information or does not follow the procedure regarding listing. Here, it was found that the Bank listed the Respondent without proving notice and while also not addressing the challenge to the account that was used. The court relied on Section 31(5) of the Banking Act that protects disclosure made in good faith while performing statutory duties but also asserted that it does not offer the bank blanket immunity from being held liable. Therefore, the appeal by the bank was dismissed.
Conclusion and Implications
This decision has significant implications for banks and financial institutions. First, it affirmed that an entity such as a bank can report genuine default to a Credit Reference Bureau, but only after giving the customer adequate and prior notice as required by Regulation 25. Further, a bank that stated that it gave notice must prove it. Additionally, proof of arrears is not enough as the bank is required to demonstrate that the information is accurate and related to the customer’s loan facility. In addition, a customer who feels aggrieved by the bank’s action may sue the bank individually and that the bank cannot shift the blame to the Credit Reference Bureau. Finally, even without proof of specific loss, a customer would still be entitled to recover general damages for an unlawful listing.