Digital lenders yesterday said they are open for an independent regulator to streamline the sector that has occasionally been accused of exploiting borrowers.
Speaking to the Star on phone, the chairperson of the newly formed Digital Lenders Association of Kenya (DLAK) Robert Masinde said they fully support Central Bank of Kenya (CBK) and other concerned entities in their quest to shield consumers and ensure professionalism in the financial market.
‘’Our position is not contrary to CBK’s suggestion. We are open to regulation. We will collaborate with anyone willing to take up the role. We came together to monitor each other to engage stakeholders and contribute to regulatory framework,’’ Masinde said.
He defended CBK governor’s reference to some digital players as shylocks, saying that it is true that some rogue entities are taking advantage of the digital wave to swindle consumers.
‘’I can not comment on the use of the word shylock, however, we share in governor’s concerns about rogue players within the system. As an association, we advocate for consumer protection hence we cannot condone such vices,’’ he said.
The association was formed early June to promote industry best practice and drive a coordinated approach in addressing the emerging industry’s pressing issues.
Among key objectives of this body includes setting ethical and professional standards in the industry, collaborate with policy makers and other stakeholders in addressing cross-cutting issues, and to drive the overall growth of the fintech sector in line with the Economic Pillar of the Vision 2030.
The association’s sentiments came just a day after CBK governor raised a red flag over the proliferation of unregulated online money lending firms.
It is composed of 12 lenders Tala, Alternative Circle, Stawika Capital, Zenka Finance, MyCredit, Okolea, LPesa, Kopacent, Four Kings Investment T/A Sotiwa, Kuwazo Capital, Mobile Financial Solutions and Finance Plan Ltd.
Appearing before the Senate’s ICT committee on Wednesday, Njoroge said there is a huge lacuna in the current financial and customer protection laws which the institutions are exploiting to exploit consumers.
“These entities are currently not regulated by CBK [and] concerns have arisen such as data privacy, source of funds and consumer protection,” he said.
He said there have been complaints about the high-interest rates or transaction fees, multiple borrowing from different lenders, non-disclosure of pricing or terms and lack of complaints or dispute resolution mechanism.
The Senate committee had summoned the governor to explain why digital lenders were charging borrowers interests as high as 180 per cent yet bank interest is capped at four per cent above CBK's rate.
