Digital lending is big business and everyone wants a piece of the pie but most people are not able to get it because they fail to secure a license from the Central Bank of Kenya(CBK). Sometimes, the reason is something substantively wrong with the Applicant’s business model, while other times, they are issues that can be easily fixed. Here are 3 common mistakes I have observed while helping different companies get a Digital Credit Provider (DCP) License;
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Copy pasting Documents Online
I recently had a company approach me to assist with their application, they had gotten feedback from the CBK and did not know how to make the corrections CBK required. One of the mistakes they made is that they copy-pasted their AML/CFT policies from online sources, which means that they ended up using French Policies which were not in line with Kenyan Laws. One of the feedbacks that the CBK gave was that their key AML/CFT policies were not in line with Kenya’s AML/CFT legal regime. It might seem cheaper to copy-paste documents online instead of consulting a lawyer, but in the long run, it never is.
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Lack of a Data Controller/Processor License
When it comes to licensing, practice has taught me that not everything required is written down and some things can only be learnt from experience. One of the reasons that licensing is such a big deal right now is because of data protection concerns from consumers. What this means is that despite it not being explicitly written in the licensing requirements, you will need to get a licence from the Office of the Data Commissioner to get a Digital Credit Provider Licence. You will also need to have comprehensive and contextualised privacy and data protection policies.
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Fit & Proper Forms
Several would-be digital lenders do not get the license or experience major delays in getting the license because they do not follow instructions when it comes to the fit and proper forms which are to be filled and signed by the DCPs’ Directors and Shareholders. They do not attach the relevant affidavits and when they do they are not properly commissioned by a Commissioner for Oaths. This forces them to engage in a back-and-forth with the CBK that makes a journey that should take a few months, take several years.
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Have you gotten corrections from the CBK? How have you implemented them? Let’s talk.
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The writer is a lawyer who specializes in offering legal services to people in technology, you can reach him through info@masibolaw.co.ke
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