Loan apps that refuse to submit proof of license risk removal from Play Store.
Over the past few years, the fintech industry has experienced sporadic growth, especially those that provide loan services, as people find it an alternative option to meet their financial needs. Kenya and Nigeria have been the major tech hubs in Africa, providing short-term, no-collateral loans of up to $500. However, due to the lack of regulations, many concerns have been raised by customers as loan app uses many improper ways to recover their funds. Google now requires Kenya and Nigeria loan apps to submit license proof or risk removal from Play Store, its digital distribution service. Those who have applied for licensing and can show proof may be spared. Google’s action came two months after the Digital Credit Providers Regulations took over to protect borrowers from rogue apps with predatory lending strategies and debt-shaming tactics.
Following similar actions in India, Indonesia, and the Philippines, new and old loan apps in Kenya must submit the required documents and information by the end of January next year. Personal loan app developers targeting Kenyans must complete a declaration form and submit supporting documents before publishing. Personal loan apps in Kenya without proper license attribution will be removed from the Play Store, Google said in a policy update. Apps in Nigeria must get a “verifiable approval letter” from the Federal Competition and Consumer Protection Commission (FCCPC).
This move will ensure compliance among the loan apps.
The FCCPC rule is lesser stringent than that of Kenya, came into effect in August to protect borrowers, and requires lending apps to declare their fees and show how they receive feedback and resolve. However, both rules for online lenders are meant to eliminate undesirable players and help the sector grow. Under the new Digital Credit Providers regulations, the Central Bank of Kenya will keep an eye on digital lenders in Kenya. Although the loan market is prolific, the lack of strict rules and Google Play Store’s sloppy way of vetting apps has attracted bad actors, so the government has had to take steps to protect people.
In Kenya, the Central Bank has only approved 10 of the 288 loan applications that were submitted. Some of the most well-known ones, such as Zenka and Tala, which are backed by Silicon Valley, have yet to be granted licenses. It is expected of Kenya’s digital lenders that they will not use threats or engage in debt-shaming practices of any kind. This includes the posting of personal information on online platforms, the sending of unauthorized calls and messages to customers, and accessing customers’ contact lists in order to get in touch with them in the event that they default on their loans.
Most creditor shares debtors’ personal information to recover their funds.
For the purposes of credit scoring and loan disbursement, loan apps capture borrowers’ phone data, including contacts, and require access to messages to look up the history of mobile money transactions. Rogue creditors have been giving debt collectors access to customers’ personal information. According to reports, the Kenyan data protection commissioner is looking into 40 different loan apps for possible data breaches. Since loan apps were previously unregulated, the new law mandates that they disclose their pricing structure, terms, and conditions to consumers in advance.
In addition to uncovering and providing evidence of their sources of funding, the apps are also expected to inform the authorities before launching new products or making modifications to existing ones. Kenyan lawmakers have given the banking regulator the authority to revoke licenses of operators who violate customer confidentiality, a provision that was added to the new law passed by the country’s National Assembly, meaning that digital lenders who share the personal information of loan defaulters with third parties risk having their licenses revoked. Most loan apps require borrowers to provide their phone numbers in order to process the loan.
Abuses will be prevented following several reports.
Following the implementation of a law intended to regulate the sector, Digital Credit Providers (DCPs) in Kenya will need to disclose and support their funding sources. The Central Bank of Kenya (CBK), the country’s financial regulator, released the new rules on Monday. They also say that digital lenders must get a license. After reports that several companies were targeting vulnerable debtors in the country and then attempting to go to extreme lengths to retrieve their money, Google said on Thursday that it had removed some personal loan apps from the Play Store in Kenya and was introducing stronger measures to stop the abuse.
Google Play: Website
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