In a significant announcement, the Federal Government has unveiled plans to introduce a new regulatory framework aimed at overseeing digital money lenders (DMLs), particularly loan apps. The move comes as a response to the escalating issue of Nigerians accumulating excessive debts through these platforms.
Speaking in an exclusive interview with TVC, Mr. Babatunde Irukera, the Chief Executive Officer of the Federal Competition and Consumer Protection Commission (FCCPC), shed light on the forthcoming regulatory changes. He emphasized that the primary focus of these new regulations would be to address the mounting challenges associated with DMLs, particularly concerning abusive practices during loan recovery.
Irukera highlighted the pervasive problem of DMLs resorting to aggressive and unethical means of loan recovery, leading to a surge in harassment and defamatory messages directed at borrowers. He underscored the detrimental impact of such practices, stressing the need for a more ethical approach to loan recovery, devoid of abusive tactics.
The implementation of the Commission’s interim framework has already yielded promising results, with an impressive 80% reduction in harassment and defamatory communications from loan apps. This progress serves as a testament to the potential effectiveness of the impending regulations in curbing exploitative practices and ensuring fair treatment of borrowers.
Expressing his firm stance against abusive loan recovery methods, Irukera refuted the notion that such tactics are the only means to communicate with borrowers. He asserted, “We must necessarily do the work, no matter how challenging it may be, to find a more sensible way to recover loans.”
Moreover, he highlighted the need to strike a balance, acknowledging the importance of safeguarding consumers while also enabling digital money lenders to recover their loans effectively. The impending regulations, scheduled for rollout in 2024, are poised to foster responsible borrowing and lending practices among both individuals and corporations. Irukera emphasized the broader scope of these regulations, encompassing a holistic approach to addressing the complexities of the lending landscape.
Providing insight into the prevalence of digital money lenders, the Commission revealed that it has granted approval to 211 such entities, underscoring the widespread reach and influence of these platforms within the financial landscape.
As the Federal Government gears up to implement these transformative regulations, the impending changes are poised to reshape the landscape of digital lending in Nigeria. With a renewed emphasis on consumer protection and responsible lending practices, the envisioned framework aims to strike a harmonious balance that benefits both borrowers and lenders, underscoring the government’s commitment to nurturing a fair and ethical financial ecosystem.
