The Federal Competition and Consumer Protection Commission (FCCPC) has revealed its plans to establish a fresh regulatory framework in 2024 to address the increasing indebtedness of Nigerians to digital money lenders (DMLs), commonly known as loan apps.
CEO of the Commission, Mr. Babatunde Irukera, announced this initiative during a live program on TVC on Monday, highlighting the significant concern of rising debt in the digital lending industry.
While the Commission has successfully curtailed abuse and harassment by loan apps, Irukera emphasized that borrowers on these platforms continue to default. He expressed concern that the escalating debt levels could jeopardize the existence of digital lenders, entities that play crucial roles in the economy.
Addressing the challenges, Irukera acknowledged that the reduction in abusive practices by loan apps has inadvertently led to an increase in defaulting by borrowers. He stressed the need to find more sensible ways to recover loans, emphasizing that abusive methods are not the only effective means of communication with Nigerians.
The CEO outlined the forthcoming regulations in 2024 as a comprehensive approach to responsible borrowing and lending by individuals and corporations. He expressed hope that future regulations would establish a centralized credit system, enabling entities like school landlords to report on the financial conduct of tenants, students, and parents.
Irukera explained that a systemic approach preventing access to credit based on financial responsibility would lead to self-regulation. The Commission found that many defaulters were individuals taking loans from multiple apps, and a centralized credit information repository could address this issue.
The interim framework implemented by the FCCPC has already resulted in an 80% reduction in harassment and defamatory messages from loan apps. However, Irukera acknowledged that efforts were ongoing to address the remaining 20%. He highlighted the evolving nature of the limited regulatory framework for loan apps, considering the novelty and emergence of fintech globally.
Under the interim framework, the FCCPC has registered over 200 loan apps, aiming to sanitize the digital lending market by eliminating unethical practices such as defamation and harassment of borrowers. Currently, a total of 211 digital lenders have received approval from the Commission. The upcoming regulations in 2024 seek to further refine the regulatory landscape for responsible borrowing and lending practices in the digital lending space.
