- Visible credit data points will also play a big role in guiding ethical debt collection practices to protect consumers from rogue and abusive debt collectors.
The Digital Lenders Association of Kenya (DLAK) has supported plans to regulate the digital lending industry, saying it will professionalize the market.
The lobby said regulating collection, use and management of credit data will boost consumer protection and enhance financial inclusion.
''The discourse around the regulation is timely, and should primarily encompass data privacy, business and consumer protection, as well as reporting requirements,''DLAK said in a statement.
The association's spokesperson Kevin Mutiso said that ethical guidelines on gathering and using customer data or collecting debts in a customer-friendly manner have already been incorporated among the association’s members in the put-into-effect Code of Conduct.
“Every customer has a Constitutional right to privacy. Digital lenders must incorporate this integral fact into their policies and processes and protect consumers from unnecessarily revealing personal information,’’ Mutiso said.
Key to this protection DLAK says, would be to institutionalize reporting to credit reference bureaus as the formal channel where borrower history is shared in a legal manner which will further open up access to credit for many unbanked low-income population.
Visible credit data points will also play a big role in guiding ethical debt collection practices to protect consumers from rogue and abusive debt collectors.
“We strongly support the idea of developing a common approach to credit data for all lenders whether they are banks, MFIs, digital or not. This will enhance inclusion and increase customer protection ’’ Mutiso said.
Digital lending services have become an important driver of financial inclusion in the country and have proven crucial for creating the opportunity to extend capital to unbanked and other financially excluded groups.
According to the State of Digital Consumer Credit Market Report by Center for Financial Inclusion, 86 per cent of loans initiated between 2016 and 2018 were digital.
“What is missing is that part of the data is not updated as fast as it should be since it appears this has not become an obligatory practice for all,” he added.