When the new rules on licensing of digital credit providers were rolled out last year, it was hoped that the bad practice of debt shaming of borrowers would come to an end.
This practice, alongside predatory interest rates, were the main reasons behind the corralling of these previously unregulated lenders into the Central Bank of Kenya’s regulatory thumb.
This week, the penalties imposed on a serially offending and unlicensed digital lender by the Office of the Data Protection Commissioner (ODPC) show the fight against the problem is far from won. Such entities continue to operate in the shadows of the financial sector.
If the regulation of the digital lending space is to achieve its goals, there should be no room for rogue operators.
The fines being imposed when they get caught are therefore not enough, even as a deterrent, and tougher action is needed to get rid of the problem once and for all.
Such apps should be shut down and their trading rights withdrawn. Further, their owners should be prosecuted for operating a lending service without a licence from the CBK.
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