The FCCPC plans to unveil a new regulatory framework in 2024 to tackle the increasing problem of escalating debt owed to digital money lenders (DMLs), commonly referred to as loan apps.
This announcement was made by Babatunde Irukera, the CEO of the Commission during a recent appearance on a TVC live program.
While the FCCPC has successfully reduced abuse and harassment by loan apps, a significant rise in loan defaults has become a pressing concern.
Irukera emphasized the need to find more sensible and ethical loan recovery methods, stating, “I am insistent that you cannot say to me that the only language Nigerians understand is to abuse them. No, I disagree.”
The CEO highlighted the potential consequences of the mounting debt, expressing concern that the collapse of digital lenders could have adverse effects on the economy. He acknowledged that despite the reduction in harassment and defamation by loan apps, borrowers were increasingly defaulting.
“One of the big issues that we’re seeing is that there’s now a significant level of loan default because people are not able to use these unethical and inappropriate loan recovery mechanisms,” said Irukera.
To strike a balance between responsible borrowing and lending, the FCCPC aims to introduce comprehensive regulations in 2024. The broader approach will encompass both individuals and corporations, promoting fiscal responsibility. Mr. Irukera envisions a centralized credit system where even school landlords can report on the conduct of tenants, students, and parents to determine creditworthiness.
The CEO emphasized the importance of a systemic approach to prevent people from accessing credit irresponsibly. He revealed that most defaulters were individuals taking loans from multiple apps, suggesting the need for a central repository of credit information.
The FCCPC has already made strides in reducing harassment and defamatory messages from loan apps, achieving an 80 percent reduction through the implementation of an interim framework.
However, Irukera acknowledged that efforts were ongoing to address the remaining 20 percent. He stressed that the regulatory framework for loan apps is evolving, considering the dynamic nature of the fintech industry.
Under the interim regulatory framework, the FCCPC has registered over 200 loan apps in its efforts to sanitise the digital lending market and curb unethical practices. As of the latest count, a total of 211 digital lenders have received approval from the Commission.
“Although the country was struggling with digital lending, it was not alone. India, Kenya, Brazil, Ghana, and Uganda are still struggling in digital lending. Some of these countries are taking lessons from what we have done,” he said.
