By JULIE OWINO, NAIROBI, Kenya – Members of the Digital Lenders Association of Kenya (DLAK) say the move to generate a code of conduct was not prompted by pressure from Central Bank of Kenya Governor, Patrick Njoroge.
Speaking during the launch of the Association formed earlier this year, DLAK Chairperson Robert Masinde said the move to adopt a self-regulatory framework was a member’s initiative, not in any way influenced by the bank regulator.
“The rules and regulations that we are planning to adapt are a self-regulation initiative for the benefit of our consumers,” said DLAK Chair Robert Masinde.
The launch of the code of conduct comes a month after the Central Bank of Kenya expressed the need for digital lending applications to be regulated like in the rest of the financial sector.
While addressing the media after a Monetary Policy Committee meeting, the Central Bank Governor Patrick Njoroge pointed out that some online lenders were robbing desperate Kenyans ignoring their mandate of offering legitimate lending solutions.
“The digital lenders have grown like mushrooms in the country and are not really working for ‘Wanjiku’,” Njoroge said.
DLAK says it’s making plans to engage with the Central Bank of Kenya and the National Treasury for advise on some of the measures placed under the code of conduct.
Under the new rules and regulations set for DLAK members, consumers will have access to clear pricing, empowering them to make informed decisions on the loan product that best meets their needs.
This will include details such as the principal, interest, fees, tenure and other items into separate line items have visual representations such as calendars to indicate due to dates for payment, when past due periods begin and other key timelines.
Consumers will also enjoy data privacy where digital lenders collect personal data only relevant to the services provided, and for which the borrower has given express permission.
Permission should be requested for individual sets of data that the borrower is granted access to. In the case of shared contact networks between borrowers, such as referrals, no data pre or post loan application details should be shared between borrowers.
“Some of the issues we witnessed in the industry brought about by clients include data privacy infringement, going to the extent of perusing in one’s contact list and reach out to them without the client’s permission,” mention the DLAK head.
Responsible lending and customer service are some of the measures highlighted under the new code of conduct to govern the members of DLAK.
The Digital Lenders Association of Kenya consists of 12 founding members; Tala, Alternative Circle, Stawika Capital, Zenka Finance, MyCredit, Okolea, LPesa, Kopacent, FourKings Investment Sotiwa, Mobile Financial Solutions,Kuwazo Capital and Finance Plan Limited.
According to Phyllis Kamau of PW Kamau and Kamau partners, members of DLAK have given themselves a duration of two months to sign the code of conduct and other industry players are welcomed to join in the journey.
“We are looking forward to protecting consumers and we urge all players to take part in this,” she said