The Federal Competition and Consumer Protection Commission (FCCPC) has announced plans to establish a fresh regulatory framework aimed at tackling the escalating issue of Nigerians accumulating debts with digital money lenders (DMLs), commonly known as loan apps.
During a live TVC program on Monday, Mr. Babatunde Irukera, the Chief Executive Officer of the FCCPC, addressed the mounting problem of indebtedness to DMLs, emphasizing that while the Commission has successfully reduced abuse and harassment by these loan apps, borrowers continue to default on their loans, posing a threat to the stability of digital lenders integral to the nation’s economy.
Irukera acknowledged that a reduction in harassment tactics employed by loan apps has paradoxically resulted in an increase in loan defaults by borrowers. He emphasized the need to find more ethical and effective ways to recover loans, stressing the importance of striking a balance to prevent the collapse of digital money lenders, crucial for providing short-term unsecured lending in the economy.
Highlighting the upcoming regulatory changes, Irukera stated that the regulations expected in 2024 would take a broader approach to responsible borrowing and lending, encompassing both individuals and corporations. He expressed hope that a centralized credit system could be established, allowing entities such as school landlords to report on the fiscal responsibility and creditworthiness of tenants, students, and parents.
The FCCPC boss emphasized the significance of a systemic approach to credit access, aiming to encourage self-regulation among borrowers. He revealed that the Commission discovered a pattern where individuals defaulting on loans are often the same individuals borrowing from multiple apps.
The interim framework implemented by the FCCPC has already achieved an impressive 80% reduction in harassment and defamatory practices by loan apps. However, Irukera acknowledged that efforts are ongoing to address the remaining 20%.
Irukera underscored the evolving nature of the limited interim regulatory framework for loan apps, considering the relatively new and emerging landscape of fintech globally. He highlighted the importance of learning from industry operations to create the most effective regulatory ecosystem.
Under the interim framework, the FCCPC has registered over 200 loan apps, seeking to sanitize the digital lending market by curbing unethical practices such as defamation and harassment of borrowers. Currently, 211 digital lenders have received approval from the Commission. Stay tuned for further developments as the FCCPC works towards a comprehensive regulatory solution in 2024.