FG to penalise internet banks for violating consumers’ rights

Social Media Plug-ins:

The Federal Competition and Consumer Protection Commission has expressed concern over the growing trend of violations of its Limited Interim Regulatory and 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 on Monday by its acting Executive Vice Chairman of the commission, Adamu Abdullahi, the commission 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 and 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, and Cashdey App, among others.

Currently, the number of digital lenders licenced 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 licenced 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 them in addition to prohibitions and consequences.