SECP advises borrowers to check legal status of loan apps

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has advised borrowers to review the legal status of digital applications before signing up for loans, as Google introduced a new policy to protect Pakistani consumers from fake loan apps.

After an extensive commission meeting, the SECP stated that borrowers should read and evaluate the disclosures regarding fees, late payment charges, loan tenor, cooling-off period, and the privacy policy of applications before signing in.

“Users are also advised to report complaints against licensed apps to SECP through the dedicated complaint portal at SECP’s website,” the commission said.

The SECP said that to address the issue of unlicensed digital lending apps operating illegally in the country, extensive liaison has been made with various regulatory bodies, including the Pakistan Telecommunication Authority (PTA), Federal Investigation Authority’s (FIA) cybercrime wing, and the State Bank of Pakistan (SBP).

Awareness campaign launched on data privacy; Google’s new policy to safeguard consumers from ‘fake’ loan apps

As a result, the SBP issued a circular in June 2022, denying access to illegal apps to banking/payment channels. The SECP is the regulator of Non-Banking Finance Companies (NBFCs) digital apps.

The SECP noted that a media awareness campaign was also launched to educate consumers on data privacy and their rights, involving mainstream and social media, capacity-building workshops, and SMS/in-app notifications.

“To combat the menace of illegal apps, the SECP has been actively engaged with Google, which on April 5, 2023, announced its Personal Loan App Policy for Pakistan, effective from May 31, 2023,” a spokesperson for the SECP said.

Pakistan is the sixth country in the world, after India, Indonesia, the Philippines, Nigeria, and Kenya, for which Google has introduced additional requirements for digital lending apps.

The policy contains checks and balances to avoid listing illegal apps on the Play Store and sets stringent requirements to minimize access to consumers’ personal data.

Google has removed 84 illegal lending apps reported by the SECP from its Play Store.