Nigeria: FCCPC vows to clamp down on loan apps violating consumer rights
The Federal Competition and Consumer Protection Commission (FCCPC) has expressed concern about a surge in violations of its Limited Interim Regulatory/Registration Framework and Guidelines by digital lenders, commonly known as loan apps.
The Commission, led by Acting Executive Vice Chairman/CEO Dr. Adamu Abdullahi, revealed that infractions have escalated alongside the growing number of Nigerians opting for loans through these apps, possibly leading to harassment and defamation tactics in response to a rise in defaulting customers.
In response, the FCCPC emphasised that flouting regulations and resorting to unethical debt recovery methods should not be tolerated by lenders.
In a statement issued today – Monday February 5, 2024, Dr. Abdullahi announced the Commission’s commitment to intensify enforcement efforts to ensure compliance with regulations, citing a zero-tolerance stance towards exploitation of consumers and abusive conduct in balance calculations, loan default enforcement, or recovery processes.
Acknowledging the heightened demand for loans during certain periods, Dr. Abdullahi stressed that violating the law or employing unethical recovery methods is not a solution.
According to him, the Commission plans to engage approved loan apps to establish a more robust compliance framework, including potential additional requirements, and explore mechanisms for addressing issues with blacklisted apps.
The FCCPC CEO welcomed demonstrated and timely compliance by legitimate operators, highlighting the Commission’s aim to promote fairness among competitors and enhance consumer protection.
“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 utilize 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,” said the FCCPC boss.
As of December last year, the FCCPC had registered and approved 211 digital lenders, with the numbers continuing to rise.
For operators lacking Commission approval, the scrutiny process may involve law enforcement action, regulatory prohibition, and consequences.
The Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending, 2022, were introduced under the leadership of Babatunde Irukera, in collaboration with the Joint Task Force (JTF), aiming to provide fair, transparent, and beneficial alternative lending opportunities for Nigerians.
The registration process was prompted by concerns about the activities of loan apps, including illegal ones, with allegations of rights violations and unfair practices.
Many borrowers have lamented about the high interest rates charged by these apps (otherwise known as loan sharks) for short term loans, making it difficult for them to repay within the stipulated time frame.
