A joint statement has been issued by the Central Bank of Kenya (CBK), the Capital Markets Authority (CMA), the Insurance Regulatory Authority (IRA), Sacco Societies Regulatory Authority (SASRA) and Retirement benefits Authority, cautioning the public against unlicensed and unregulated financial services and products consisting of online pyramid schemes, credit and savings schemes and fraudulent mobile loan applications.
“Some of the features of these products include payment of a registration fee, members of the public being required to save before qualifying for a credit facility and reliance of investment strategies that are not explained or clearly understood.” says a statement issued to the dailies.
The regulatory bodies have insisted that the public should only conduct business with licensed financial institutions as well as urging financial institutions to display their licensing certificates approved by the concerned regulators. According to the notice, these fraudulent mobile loan applications are downloadable from mobile app stores, including Google Play Store and Apple Store.
The public notice reads:
“Members of the public are reminded to confirm the authenticity of financial services and products with financial institutions, particularly where registration fee or saving is required. It should also be noted that all legitimate businesses and entities in Kenya are registered and authorised by the national and county governments and should display certificates of registration or business permits.”
“Members of the public should demand to see these certificates and/or business permits if they are not displayed by the institutions,” the regulators add.
The Features Consumers Should Look Out For
Providers of these financial products and services usually ask for the payment of a registration fee, they require members to save first before receiving a credit facility, and they guarantee unusually high gains with little to no risk or without revealing the risks involved.
Consumers should also be wary of institutions using investment strategies that are not explained or clearly understood and those requiring “recruitment of more clients to earn points and qualify for more benefits such as bigger loans.
Other red flags include the lack of registered physical address details, the display of non-existent websites, telephone numbers, and addresses, lack of a license from the relevant regulators, and lack of customer care support.
With regards to fraudulent mobile loan applications, Kenyans should avoid using apps that “copy the look and feel of genuine mobile applications of known and licensed financial institutions.”
The regulators have asked the public to volunteer information regarding institutions offering fraudulent services and products.
