SACCO body escapes regulatory coalition

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SACCO body escapes regulatory coalition

The SACCO Societies Regulatory Authority (SASRA) will go it alone in strengthening transparency among savings cooperatives after successfully lobbying to be excluded from a looming merger of all financial regulators. Commissioner for Cooperative Development Mary Mungai said a delegation including 22 leaders of cooperative movements that visited President Uhuru Kenyatta, convinced him to drop SASRA from the merger plan. “I want to assure all of you that SASRA will not be included in the Financial Services Authority (FSA). Cooperative movements operate on a business model unique from normal commercial entities,” she said.

This means the committee gazetted on November 18, 2016 to spearhead the merger of the country’s four major financial regulators will only handle Retirement Benefits Authority, Capital Markets Authority and Insurance Regulatory Authority. Speaking during the Kenya Union of Savings and Credit Cooperatives (KUSCCO) annual delegates meeting in Nairobi, Ms Mungai said SASRA has been in existence for only seven years and will be strengthened rather than killed. Merging the four institutions into one, the government had argued, would provide a better and organised regulatory approach to the increasingly integrated and converged financial services.

But even with SASRA set to remain on its own, Ms Mungai said prudential guidelines will be strengthened to help seal regulatory loopholes in the SACCOs. SACCOs currently hold over Sh600 billion in customer deposits. “FSA had very good intentions. We are going to take seriously the issue of prudential standards. We want them to be strengthened so that the movement can grow further,” said the commissioner. Some briefcase institutions disguised as SACCOs have in the recent past plunged members into distress by folding unexpectedly and running away with mobilised funds. Meanwhile, SACCOs have been put on the spot for failing to refund exiting members their money on time.

During the meeting, KUSCCO Managing Director George Ototo cautioned the societies on holding onto members’ contributions against their will. “Some are taking even more than a year to refund members. If such cases reach the tribunal, it will not only damage the reputation of the SACCOs involved but also make it costly for them,” he said. Since some SACCOs are operating more efficiently than others, members may want to shift from poorly-performing entities but such SACCOs hold onto their funds to block the move.


Source: https://www.standardmedia.co.ke/business/article/2001240511/sacco-body-escapes-regulatory-coalition

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