Magister Legum - LLMThe dynamic character of the financial services industry necessitates frequent appraisal of the
regulation of the sector. The main objectives for regulation of the financial sector include
financial stability, promotion of competition and protection of the consumers. In ensuring
consumer protection, there is need to balance this with all the other objectives to ensure optimal
protection in the entire financial sector. This can be difficult as it is mostly dependent on the
regulatory framework in the financial sector for the basic reason that most of the failures are
associated with regulation. Key to the challenges is that consumer protection is served by
measures that ensure proper conduct on the part of the service providers. Interests of the
providers of the financial services may thus not be sufficiently aligned with those of the
consumers of the products.
There are three common models of financial regulation. They are the sectoral model, unified or
integrated model and the Twin Peaks model. The financial sector in Kenya follows a sectoral model. It is a hodgepodge of institutional and functional regulation. There are five (5)
government agencies that regulate specific segments of the financial sector with each of the
regulators being established to operate independently within the permits of an Act of Parliament.
This is without mentioning the many other segments that have no specific regulators
