The Federal Competition and Consumer Protection Commission (FCCPC) has raised concerns over a surge in the increase in the violations of its Limited Interim Regulatory/Registration Framework and Guidelines by digital lenders, commonly known as loan apps.
In a statement issued by its Acting Executive Vice Chairman/Chief Executive Officer, Dr. Adamu Abdullahi, the Commission expressed concern over the rising number of infractions, attributing them to the growing adoption of loan apps among Nigerians. The surge in violations has been exacerbated by an escalating number of defaulting customers, prompting some lenders to resort to harassment and defamation tactics.
Dr. Abdullahi emphasized that while loan defaults pose challenges for lenders, contravening regulatory guidelines and resorting to unethical debt recovery methods are unacceptable, asserting its commitment to intensifying enforcement efforts to ensure compliance with regulations governing digital lending practices.
“The solution cannot be to violate the law or utilize unethical recovery methods,” Dr. Abdullahi reiterated, highlighting the Commission’s zero-tolerance stance towards consumer exploitation or abusive conduct by digital lenders.
Moving forward, the FCCPC plans to engage approved loan apps to establish a more robust compliance framework, including additional requirements where necessary, and explore mechanisms to address concerns regarding previously blacklisted apps.
Under the leadership of Babatunde Irukera, the FCCPC introduced the Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending in collaboration with the Joint Task Force (JTF) to promote fair, transparent, and beneficial lending opportunities for Nigerians. The registration process was initiated in response to concerns regarding the activities of loan apps, particularly illegal ones, which were accused of violating consumer rights and engaging in unfair practices.
While the number of registered digital lenders has continued to increase, concerns persist over the growing rate of loan defaults, with borrowers citing high interest rates as a major contributing factor. Consequently, both registered and unregistered loan apps have resorted to various means, including unethical practices, to recover debts from borrowers.
As of December last year, the FCCPC had registered and approved a total of 211 digital lenders, with ongoing efforts to address emerging challenges and ensure compliance with regulatory standards.