NAIROBI, Kenya – Digital Lenders yesterday, July 9th, said they now support the proposal to have their work regulated by the Central Bank of Kenya (CBK).
Digital Lenders Association Chairperson Kevin Mutiso said they support the recent regulation drafted by the parliamentary finance and planning committee proposing to put them under the regulatory ambit of CBK.
The public debate on whether to regulate digital lenders has dragged on for months. The tabling of the Central Bank of Kenya (Amendment) Bill, 2021 in Parliament should settle it.
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The Association, however, made a raft of proposals they want to be implemented in the Committee’s draft, among them having a regulation that is focused on the registration process instead of licensing.
“Digital Lenders are small companies with a maximum of 30 employees. Thus, the best solution is to use regulatory systems that will fulfill its task and make the legislator feel comfortable with the applied solution, but at the same time will not cause a significant increase in the operating costs of a company, nor will it be a complicated and highly formalized process.”
The digital lenders also want the CBK to allow them into the credit information sharing system from which they were locked out at the onset of the COVID-19 pandemic.
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“We propose to add direct regulation that the Digital Credit Providers will be entitled to receive the reports from CRBs and to submit the reports with credit information to CRBs as well,” he said.
This means the digital mobile lenders can forward the names of loan defaulters to credit reference bureaus which is better instead of relying on uncouth methods such as bombarding relatives and friends with messages regarding loan default and asking third parties to enforce repayment.
The lenders also want all customers to be provided with clear, transparent, and articulated information on the pricing of the loans before they apply for the loan.
This should be done by providing the conclusion of the loan agreement in a unified form with the key financial information concerning the loan.
“This solution is implemented in all EU countries, but also we can find it in Uganda.”
To further increase consumer protection, the Association also calls for the establishment of a position of a financial ombudsman within the CBK structures, responsible for examining customer complaints.
