The Nigerian government has announced its intention to crack down on loan apps engaged in illegal debt recovery practices and the exploitation of consumers. This move comes in response to a surge in violations of the Interagency Joint Task Force’s Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending 2022.
While digital money lenders (DMLs) have provided financial access to many individuals, the industry faces challenges as some loan providers resort to unethical and illegal methods to recover debts. These practices, including forgery, impersonation, and breaches of privacy, have instilled fear and distress among borrowers.
Despite these risks, many Nigerians continue to rely on loan apps to address financial needs, especially amid rising inflation rates, which reached 28.92% in December 2023, according to the National Bureau of Statistics (NBS). This inflation surge has significantly affected Nigerians’ ability to maintain their standard of living, leading to reduced spending and an increased risk of loan defaults.
Adamu Abdullahi, the head of the FCCPC, emphasized the need to address the increased demand for loans while maintaining compliance with the law and ethical standards. He stated that the commission would intensify enforcement efforts and adopt a zero-tolerance approach to exploitation or abusive conduct in balance calculations, loan default enforcement, or recovery processes.
Abdullahi further announced that the commission would engage approved loan apps to ensure stricter compliance frameworks, including additional requirements where necessary. He emphasized the importance of timely compliance by all legitimate operators to promote fairness to consumers and among competitors.
Regarding operators without the commission’s approval, Abdullahi stated that the scrutiny process would involve law enforcement action, regulatory prohibition, and other consequences to ensure compliance with regulations and protect consumers from exploitation.
