FG set to release regulations to help digital lenders with loan recovery

 

The Federal Competition and Consumer Protection Commission (FCCPC) has announced plans to release fresh regulations to tackle the increasing level of indebtedness to digital money lenders (DMLs) by borrowers.

This was disclosed by the Chief Executive Officer of the Commission, Babatunde Irukera, during a live TV programme recently.

The FCCPC chief executive noted that it was important to set up the regulatory framework to improve loan recovery methods in the country amid the rising default rates.

According to Irukera, the digital lending space had witnessed a high level of indebtedness from borrowers despite the commission’s success in reducing the rate of abuse and harassment by loan apps.

He added that there was a need to also protect the digital lenders from incurring more losses from the rising debt as it could lead to the collapse of the digital lenders that are also playing critical roles in the economy.

The FCCPC has within two months, delisted 55 defaulting loan apps in Nigeria.

In August 2023, the commission had instructed Google to remove 18 digital lenders from Playstore for violations of its guidelines while 37 digital lenders were blacklisted in September.

The affected digital lenders were guilty of operating without regulatory approval, an act which violated the Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending, 2022 (Guidelines).

The commission noted that the successful removal of the defaulting loan apps had reduced harassment and defamatory messaging in the sector by about 80%.

Irukera said, “One of the big issues that we are seeing is that there is now a significant level of loan default because people are not able to use these unethical and inappropriate loan recovery mechanisms and I am insistent that you cannot say to me that the only language Nigerians understand is to abuse them. No, I disagree.”

He added that in 2024, there was a need to find a balance which will come in the form of new regulations that will govern responsible borrowing and responsible lending by individuals and corporations.