Digital lenders reduce shaming after controls

Digital Financial Services Association of Kenya

Digital Financial Services Association of Kenya chairman Kevin Mutiso. 

Photo credit: File | Nation Media Group

Harassment and debt shaming cases by digital lenders in Kenya have declined by up to 75 percent courtesy of joint efforts between the Office of the Data Protection Commissioner (ODPC) and the Digital Financial Services Association of Kenya (DFSAK).

During a sensitisation session for lenders regarding the compliance guidance notes in Nairobi Thursday, Data Protection Commissioner Immaculate Kassait attributed the decline to the introduction of rules by the Central Bank of Kenya (CBK) two years ago.

The Data Protection Regulations, 2021 which took effect in February 2022 bar the sharing of data with third parties without consent and give individuals the right to be told when their data is being shared and why.

Harassing customers

DFSAK chairman Kevin Mutiso has warned the outlier players that if they continue to harass customers, they won’t be spared by the rules.

“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 Mr Mutiso.

“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.”

Among tactics used previously by the firms to recover overdue loans included sending of debt collection agents to pursue borrowers either by informing their friends and family or by threatening to share their loans positions with their employers.

Driven by a high mobile phone penetration rate combined with a large unbanked population, Kenya stands at a vantage position in Africa’s digital lending revolution as the platforms offer the promise of growing financial inclusion and access to credit.

As of March this year, the CBK had granted licences to 51 digital credit providers as 480 applications awaited review.

Data from DFSAK shows that digital lenders in Kenya serve a total of eight million customers and make short term loans of between Sh10 billion to Sh15 billion per month.

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