Credit Report

Debt Shaming Cases by Mobile Lenders Down 75% on Fresh Regulations

Cases of harassment and debt shaming by digital lenders have declined following the joint efforts to bring sanity to the sector, led by the Office of the Data Protection Commissioner and the Digital Financial Services Association of Kenya (DFSAK).

During a sensitization session organised by Metropol Credit Reference Bureau (MCRB) in conjunction with DFSAK for lenders regarding the compliance guidance, the Data Protection Commissioner, Immaculate Kassait, noted a drastic decline in complaints against financial service providers.

It follows the introduction of a regulatory framework by the Central Bank of Kenya (CBK) two years ago.

“We have been working collaboratively with the ODPC to ensure customer protection. This has led to a significant decline in harassment by over 74 percent. The practice of debt shaming is nearly eradicated, and those who continue to harass customers do so at their own peril,” said Kevin Mutiso, Chairman of DFSAK.

“A collaborative approach between regulators and the industry is crucial to achieving mutually desired outcomes. The guidance from the ODPC is a true case study of how such collaboration is essential.”

Assist Digital Lenders in Complying with Regulations

Recently, the German International Cooperation (GIZ) and Financial Sector Deepening (FSD) co-sponsored the implementation of guidance notes to assist digital lenders in complying with regulations, particularly in the area of data protection.

Also Read: MPs move to stop digital lenders from debt shaming Kenyans

Kenya stands at the forefront of the Digital Lending Revolution in Africa.

Driven by a high mobile phone penetration rate and a large unbanked population, digital lending platforms have emerged as game-changers, offering financial inclusion and access to credit for millions.

Records of Borrower Consent

However, this dynamic landscape is continuously evolving, facing challenges and embracing new opportunities while navigating a recently introduced regulatory framework.

The law requires digital lenders to keep records of borrower consent, notices provided to customers, and maintain a data retention schedule for all personal data.

Data from DFSAK shows that digital lenders in Kenya serve a total of 8 million customers and lend out between Ksh.10 billion to Ksh.15 billion per month.

According to statistics from the Central Bank of Kenya (CBK), 51 digital lenders have been licensed to operate in Kenya, while over 500 others have submitted their applications.

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Lawrence Baraza

Lawrence Baraza is a dynamic journalist currently overseeing content at Metropol TV Digital. With a keen focus on business news and analytics, Lawrence guides the platform in delivering insightful, data-driven content that empowers its audience to make informed decisions. Lawrence’s commitment to quality and his ability to anticipate market trends make him a key figure in the digital media landscape. His work continues to shape the way business news is consumed, making a significant impact in the field.

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