The Federal Competition and Consumer Protection Commission, FCCPC, has expressed concern over the growing trend of violations of its Limited Interim Regulatory/Registration Framework and Guidelines by digital lenders, commonly known as loan apps.

As a result, it said it would sanction erring online banks for customer rights violations.

In a statement released recently by its acting Executive Vice Chairman of the commission, Adamu Abdullahi, highlighted a surge in infractions as more Nigerians turn to those digital platforms for loans.

The regulator acknowledged that the increase in violations may be attributed to the rising number of defaulting customers, leading some digital lenders to resort to harassment and defamation practices in their debt recovery efforts.

The FCCPC boss noted that such actions, which breach the regulatory guidelines, were not acceptable methods for debt recovery.

“The commission understands the increased demand for loans during this time of year, leading to an increased risk of default due to large numbers and typical cash flow challenges and constraints.

“However, the solution cannot be to violate the law or utilise unethical recovery methods. As such, the commission is intensifying enforcement efforts and adopting a zero-tolerance stance towards any exploitation of consumers or abusive conduct, whether in balance calculations, loan default enforcement, or recovery processes.

“In addition, in the coming days, the Commission will be engaging approved loan apps concerning a more robust compliance framework including any additional requirements where applicable, and possible mechanisms for otherwise blacklisted apps.”

The Limited Interim Regulatory/ Registration Framework and Guidelines for Digital Lending 2022 became imperative after several reports of persistent harassment by digital lenders.

The FCCPC, under this framework, is empowered to regulate the digital lending space and make registration and approval a prerequisite for companies seeking to operate in the digital lending space following the illegal activities of some of these apps.

The FCCPC last year identified some loan sharks that were operating illegally in the country. Some of them include Naija Cash, Eagle Cash, Firstnell App, Flypay, Spark Credit, Softnaira App, Cashdey App, among others.

Currently, the number of digital lenders licensed to operate in Nigeria is 211 based on data from the FCCPC.

Of the 211 digital lenders, 172 have full approval, while 39 have conditional approvals. This is a slight increase from the 204 licensed digital lenders as of September.

Further, the FCCPC boss said it would welcome compliance by all legitimate digital lenders to promote and enhance fairness to consumers and fairness among competitors.

However, he reiterated that non-compliant operators would undergo a scrutiny process, which includes law enforcement action against such, in addition to prohibition and consequences.

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The current Acting Executive Vice Chairman/CEO of the Federal Competition and Consumer Protection Commission (FCCPC), Dr. Adamu Abdullahi, affirmed the Commission’s commitment to crafting a new regulatory framework for loan apps.

Despite the removal of former FCCPC leader Babatunde Irukera, Abdullahi, who previously served as the Head of Operations, shared during a live interview on Channels TV that he was involved in prior investigations and regulatory development.

He emphasized continuing the efforts initiated by Irukera to address the increasing indebtedness to loan apps, ensuring consumer protection.

Abdullahi highlighted collaborations with entities like CBN, Data Protection Commission, EFCC, and ICPC, aiming to create a secure environment for the operation of loan apps.

Notably, the FCCPC’s successful identification of companies behind the apps through Interim Regulation was highlighted, addressing issues of anonymity and potential harassment associated with loan app practices.

Abdullahi acknowledged the crucial role of loan apps in the economy but emphasized the need for a balanced approach to protect consumers from undue hardships during the loan repayment process.

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The Federal Competition and Consumer Protection Commission (FCCPC) has greenlit more digital money lenders, commonly referred to as loan apps, boosting the roster of approved companies to 211 by the close of October.Out of the 211 companies, 172 have secured full approval from the Commission, while 39 have conditional approval.

This represents an increase from the 161 fully approved companies and 40 conditionally approved ones in September.This uptick indicates a rising interest among companies seeking FCCPC’s endorsement in the digital lending industry, despite its tarnished reputation due to allegations of borrower harassment and defamation by certain lenders.

Furthermore, the FCCPC resumed registering digital money lending apps after the March 27, 2023 deadline, opening doors for more businesses to enter the market.In parallel, the number of loan apps under the FCCPC’s watchlist has surged from 55 in September to 84 at the end of October. These watchlisted apps are suspected of unethical practices.

Some of the apps on the watchlist include Cashlawn App, Easynaira App, Crediting App, Yoyi App, Nut Loan App, Cashpal App, Nairaeasy Gist Loan App, Camelloan App, Nairaloan App, Moneytreefinance Made Easy App, Cashme App, Secucash App, Creditbox App, and Cashmama App, among others.Apart from those on the watchlist, the FCCPC, in collaboration with Google, has removed 45 loan apps from the Google Play Store for operating illegally in Nigeria.

This list of approved loan apps is part of the registration initiative initiated by the FCCPC last year. The Commission, in collaboration with the Joint Task Force (JTF), developed the Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending, 2022, with the aim of promoting fair, transparent, and beneficial lending opportunities for Nigerians.

The need for this registration was prompted by the questionable practices of some loan apps in the country, especially illegal ones that have been accused of rights violations, unfair practices, and exorbitant interest rates, among other infractions.

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