Delayed refunds top complaints list by Sacco members

For the third year running, the largest proportion of complaints received by the Sacco Societies Regulatory Authority(SASRA) related to members who were seeking a refund of their savings and deposits or a transfer of shares.

This figure stood at 121 cases or 55.76% of all complaints made up of 82 from DT SACCOs and 39 non-withdrawable deposit-taking SACCOs.

Regulations 2010 for DT-SACCOs as well as the Regulations 2020 for NWDT-SACCOs provide that a SACCO shall refund a member the savings or deposits (less any outstanding dues owed to the SACCO Society) within sixty (60) days after the member has served the SACCO with a notice of withdrawal.

The complaints analysis, contained in the latest SASRA Annual Supervision Report 2021, however, shows that these legal provisions are never honoured by the SACCOs in respect of which the complaints relate, as evidenced by the fact that out of all the complaints received and processed by the Authority in 2021.

A proportion of 41.84% of the complaints related to claims for refunds and savings by members were received and processed by SASRA in 2020.

The main reason for delayed settlement of claims for refund of savings and deposits of members within the prescribed time, according to the SASRA report, is perennial liquidity challenges.

SASRA is urging SACCOs to ensure that they have adequate liquidity management plans that cater to the unexpected applications by members for a refund of their savings and deposits to avoid the backlashes and supervisory enforcement actions associated with failure to make timely refunds of savings and deposits.

Indeed, delayed refund of savings and deposits to members exiting SACCOs can trigger a liquidity run-in by other members.

Figures from the SASRA database show that loans and loans issuance ranks second in terms of complaints by SACCO members at 11.98% or a total of 26 cases.

 A summary of the complaints received and resolved by SASRA also shows that in third place were complaints concerning suspected fraud at 5.07% of all reported cases or 11 complaints, followed by issues around guarantors and guarantee for loans (4.61%) or 10 complaints, irregular deductions of deposits (4.15%) or 9 cases, misuse of security/collateral by SACCOs (3.23%) or 7 complaints, delayed deceased payments/pension (2.76%) or 6 reported complaints, non-remittances/statements (2.30%) or 5 complaints, failure to pay dividends on time (1.38%) or 3 cases, CRB listing (1.38%) or 3 cases, irregular FOSA Account transactions (0.46%)or 1 case while elections within the societies registered no complaints.

Other general complaints within SACCOs stood at 6.91% or 15 cases comprising 13 from DT Saccos and 2 from non-withdrawable DT Saccos.

SASRA places emphasis on a prompt, efficient and friendly resolution of complaints and general inquiries raised by members of SACCOs and the public in general, particularly in respect of financial services and operational activities.

Complaints trend analysis is one of the most important off-site analysis and monitoring tools used to detect nascent problems in SACCOs.