MOGO Kenya Clarifies Settlement with Competition Authority of Kenya
By Our Reporter
MOGO Kenya, a leader in providing accessible financing options for used cars, logbook loans, Boda Boda, and Tuk Tuk loans, has entered into a settlement agreement with the Competition Authority of Kenya (CAK).
The company, committed to promoting financial inclusion and supporting the growth of Micro, Small, and Medium Enterprises (MSMEs) across the country, issued a statement on October 4 addressing the settlement and reaffirming its customer-first approach.
“In reference to the settlement we have entered into with the Competition Authority of Kenya, Mogo was guided by our values that the welfare of the customer is paramount,” the firm says in the statement.
MOGO Kenya had offered a variety of financing products, including dollar-denominated loans.
These loans, with comparatively lower interest rates than Kenyan shilling-denominated options, were chosen by less than 15% of the company’s customers.
However, due to fluctuations in currency exchange rates, some borrowers faced higher repayment amounts, leading to customer complaints.
In response to these complaints, and in consultation with the CAK, said the statement, MOGO Kenya opted for a settlement agreement, emphasizing that this action was taken in good faith.
“Dollar denominated loans was one of the products Mogo was offering to our customers. The product had lower interest rate as compared to Kenyan Shilling denominated loans. Less than 15% of all Mogo customers by free choice had taken dollar denominated loan. Unfortunately, due to currency fluctuations, loan repayment amount for part of such customers increased. When complaints were raised through CAK, Mogo decided to enter into a settlement agreement with the CAK and the complainants,” MOGO confirmed in the statement.
The company clarified that this was not a result of any legal infraction, as dollar-denominated loans are fully compliant with Kenyan regulatory standards.
Rather, the settlement reflects MOGO’s commitment to resolving customer concerns and maintaining positive relationships with all stakeholders.
MOGO Kenya further announced that as of May 2024, it had ceased issuing new dollar-denominated loans. This strategic decision aligns with the company’s dedication to continuously refining its product offerings in the best interest of its customers.
“It is important to note that the settlement agreement means a goodwill settlement by Mogo rather than Mogo being fined for wrong behaviour due to dollar denominated loans being fully legal as per regulatory framework to which Mogo adheres in Kenya. Mogo has also made a decision to stop issuing new dollar denominated loans in Kenya since May 2024,” adds the statement.
Through this settlement, MOGO Kenya reinforces its values of transparency and customer welfare, as it continues to play a pivotal role in empowering Kenyan entrepreneurs and supporting the nation’s economic growth.
The Competition Authority of Kenya has ordered Mogo Auto Limited to pay a pecuniary penalty of Ksh10,851,473.20 for violating the Competition Act CAP 504 by engaging in what it termed as “false and misleading representation and unconscionable conduct against its customers.”
In addition, CAK has asked Mogo to refund three loan customers Ksh344,939, being the sum of excess amounts charged in repayment of their facilities, and the difference in the dollar exchange rate applied during issuance.
“Mogo has also been directed to; refrain from misrepresenting facts and engaging in unconscionable conduct when dealing with its clients, amicably resolve all pending complaints before the Authority, and resolve future complaints expeditiously,” CAK says in a statement.
According to CAK, investigations into Mogo’s conduct were occasioned by complaints lodged with the Authority by the financier’s four customers on varied dates between May 6, 2023 and April 11, 2024.a
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