Amidst malpractices and incessant harassment by some digital lending companies, which they have refused to stop despite complaints by members of the public and several warnings by watchdogs, the federal government has moved to end their operation using telcos and financial service providers.
The Federal Competition and Consumers Protection Commission, FCCPC, has directed payment systems operators, PSOs, such as Flutterwave, Opay, Paystack and Monify, as well as telecom companies in Nigeria to stop providing support that enables the operations of illegal digital money lenders, also known as money sharks, in Nigeria, Vanguard reports.
This was disclosed in Lagos by the Executive Vice Chairman/Chief Executive Officer, FCCPC, Babatunde Irukera, on Thursday, during the enforcement action against Soko Lending Limited, a notorious loan shark guilty of the aforementioned malparctices.
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“FCCPC has also ordered telecommunication/ technology companies (including Mobile Network Operators (MNOs) to cease and desist providing server/hosting, or other key services such as connectivity to disclosed or known lenders who are targets/subjects of investigation or otherwise operating without regulatory approval,” he said.
Regulating the digital loan companies has been a challenge because they are not registered and many of them operate from no known offices. They also manipulate systems to evade regulatory efforts.
Irukera said the FCCPC has secured orders to disable or diminish violators’ ability to circumvent regulatory efforts to protect citizens. In addition, he disclosed that a Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending has been developed and adopted by the inter-agency Joint Regulatory and Enforcement Task Force as an interim step to establishing a clear regulatory framework for the sector.
“Soko Lending appears to be the most consequential digital money lender with multiple apps and brand names covering a significant share of the digital/online lending market, and one of the most prolific actors in violating consumer privacy, fair lending terms and ethical loan repayment/recovery practices.
“The Commission has also entered further Orders that will disable or diminish violators’ ability to devise circumvention efforts or alternative mechanisms to circumvent the objective of the investigation and protection of citizens,” he said.
Irukera noted that previous efforts to reduce exploitative practices in the industry had been thwarted by some of the lenders who devised methods to circumvent account freezing and app suspension orders.
“Particularly, the Commission has ordered all operating payment systems including Flutterwave, Opay, Paystack and Monify to immediately cease and desist providing payment or transaction services to lenders under investigation or not otherwise operating with applicable regulatory approvals.
“The inter-agency Joint Regulatory and Enforcement Task Force has developed and mutually adopted a Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending, 2022 as the first and interim step to establishing a clear regulatory framework,’’ he said.
The development is a huge reprieve to consumers who have been under the weight of unguarded actions of digital loan platforms. The loan sharks use defamation, blackmail and other vices to compel their debtors to pay even when they have not defaulted.