Buy Now, Pay Later (BNPL) firms face a parliamentary grilling over claims that they exploit borrowers, after the National Assembly's Finance and National Planning Committee announced a review of the sector that will also bring in the Central Bank of Kenya (CBK).

Committee chairperson and Molo MP Kuria Kimani said on Thursday, 15 October, that the panel had received several complaints from people who say they were exploited by BNPL providers, People Daily and Capital FM reported. He warned that companies invited to appear before the lawmakers must turn up.

"The Committee is in receipt of several complaints from victims of exploitation," Mr Kimani said, according to People Daily, adding that all firms in the sector would be required to show that their operations strictly follow existing safeguards.

Mogo Auto skips meeting

The warning followed the failure of Mogo Auto Limited to attend a meeting at which MPs had planned to discuss concerns over motorcycle asset financing and BNPL arrangements. The company asked for the session to be rescheduled, according to the committee.

Mr Kimani said the panel would not hesitate to invoke Standing Order 191 of the National Assembly, which allows the House to compel attendance, against firms that ignore its invitations. Nairobi Wire reported that the committee has not said whether it granted Mogo Auto's request, and that no date has been set for the meeting with BNPL firms.

The review covers both BNPL services and motorcycle asset financing. MPs will question firms on their financing products, how customers are signed up, their licensing status and whether they comply with requirements set by the CBK and other regulators.

Lawmakers also plan to examine how the companies manage customer accounts after loans are issued, including how payments are reconciled, how statements are issued and how borrowers are told about arrears or changes to their accounts.

Default and recovery practices will come under close scrutiny. The committee intends to look at the notices issued to customers who fall behind, how assets are repossessed, valued and sold, and how the proceeds of such sales are applied to outstanding loans, according to People Daily and Capital FM.

The MPs will further assess the channels available to customers who want to lodge complaints, seek redress or escalate disputes, as well as how firms supervise their agents and third-party service providers.

Central Bank to appear

As part of the inquiry, the committee is scheduled to meet the CBK to assess how the sector is regulated and whether firms are complying with existing rules. The engagement is expected to help the committee establish the regulatory position of companies in the sector and identify gaps in the enforcement of consumer safeguards, People Daily reported.

The lawmakers will also seek views on the operational and regulatory challenges facing the industry, as well as recommendations to improve regulatory clarity and customer protection.

The committee has not outlined specific findings against any individual firm and has not named other BNPL providers it intends to invite. Nairobi Wire noted that the panel has not disclosed the number of complaints received or details of the alleged exploitation.

The inquiry is not the first time MPs have turned their attention to the sector. In 2024, lawmakers urged the CBK to seek legal changes that would give it control over BNPL firms, amid complaints of predatory lending, including from boda boda riders whose motorcycles were repossessed before they had finished repaying their loans.

Later that year, the Business Laws (Amendment) Bill, 2024, sponsored by National Assembly Majority Leader Kimani Ichung'wah, proposed bringing BNPL arrangements and non-deposit-taking credit providers under CBK regulation and allowing the regulator to determine the prices such firms charge, Business Daily and The Eastleigh Voice reported at the time. The proposals excluded hire purchase agreements governed by the Hire Purchase Act.

Photo: Parliament Buildings, Nairobi. Capital FM