Mobile Loan Apps To Lose Licence for “Debt Shaming” Tactics

Rogue digital lenders who share personal data of loan defaulters will be stripped of their operating licences if Parliament passes proposed changes to the law to curb abuse of confidential records.

The National Assembly committee on Finance and National Planning has added a clause to the Central Bank Amendment Bill 2021, granting the banking regulator powers to revoke the permits of digital lenders who breach the confidentiality of personal information to pursue defaulting borrowers.

The proposed law aims to stop a trend where some lenders resort to “debt shaming” tactics to recover loans.

There are reports of debt collection agents pursuing borrowers either by informing their friends and family using contact information scraped from their phones or by threatening to tell their employers.

“The bank may suspend or revoke a licence by written notice to the holder of the licence, if the licensee (digital lender) is in breach of subsection (2A) or the conditions of the Data Protection Act or the Consumer Protection Act,” says the Bill.

The Data Protection Act bars sharing of data with third parties without consent and gives individuals the right to be told when their data is being shared and for what purposes.

Source : Business Daily