The rapidly growing financial technology (FinTech) sector is supposed to be placed under the regulation of the Central Bank of Kenya as financial experts suggest.
The lenders had earlier announced that they would start a policy of self-regulation which would help in weeding out loan defaulters without affecting the lending industry.
Sterling Capital Executive Director, John Kirimi commented that Moving from no regulation to self-regulation would be a mistake as the lenders are likely to come up with regulations which only suit them and neglects the borrower.
Kirimi further argued that since the lenders are part of the country’s monetary policy, they have to be placed under CBK dismissing the argument by the lenders that they are not deposit-taking institutions hence should not be externally regulated.
Led by their chairperson, Robert Masinde, Digital Lenders Association of Kenya (DLAK)says they have already come up with a code of conduct that will guide the members in their self-regulation process pointing out that external control would hold back the sector.
“Once, we have such a mechanism in place, those among us who are exploiting customers will automatically find themselves out of business,” Masinde pointed out.
The rules that DLAK has set, seeks to empower customers by giving them access to clear pricing, including details that would help and inform them on what suits them the most.
The Association was launched in early 2019 with 11 founding members including Tala, Alternative Circle, Stawika Capital, Zenka Finance, MyCredit, Okolea, Lpesa, Kopacent, Four Kings Investment, Kuwazo Capital and Finance Plan.
In Kenya, many people have resorted to these digital lenders due to the fact that they offer fast loans and directly, that is there is no serious paperwork required for one to access loans.
The same borrowers have complained that mobile lenders take more interests and have lethal penalties when late payments are made.