THE Federal Competition and Consumer Protection Commission (FCCPC) has warned that defaulting in repaying loans taken from digital money lenders (DMLs) could lead to their collapse.
The commission also said it was working on a new system to replace harassment and defamatory messages customers receive from the DMLs, also known as loan apps.
The commission said the new plan would be a systematic, ethical and globally acceptable method of protecting borrowers and lenders.
The commission’s chief executive officer, Babatunde Irukera, said these on Thursday, December 28, while fielding questions on Arise TV’s Global Business Report.
Irukera said it was important to protect both the borrowers and the lenders.
He said indebtedness to the loan apps had become a major concern to the commission, adding that the lenders were critical to the nation’s economy.
He noted that although the commission had successfully reduced harassment and abuse by the loan apps, Nigerian borrowers on the platforms had not stopped defaulting.
“One of the things we’ve also seen is that some of the borrowers now stand on the platform of FCPC’s work as a basis to default. So we would be working to promote an ecosystem that replaces the harassment and the defamatory messages with a far more methodical, ethical and globally acceptable method of protecting borrowers and lenders because it’s important that we don’t kill the lenders also,” he stated.
He said the new strategy would require the lenders to be more responsible and not just issue loans indiscriminately.
“And then borrowers who demonstrate a lack of creditworthiness or fiscal irresponsibility will suffer the penalty of not being able to borrow again.
“And so that’s the framework that we’re looking to institutionalise as we go, and that fits completely,” he added.
According to Irukera, the most vulnerable people in society are the ones who patronised the loan apps and the ones who get victimised by their conduct, “so finding that balance is what is important, and we’ve watched how the market is operating with limited monitoring regulatory framework.”
He said even though the commission had gotten other stakeholders like Play Store involved, they had noticed how the loan apps were going outside of the framework using APKs not on the Play Store and advertising through WhatsApp, Facebook and all the other devices.
“So we’re going to present additional regulation to check that we will be moving to a place where we would literally be saying if we have not been able to scrutinise a particular lender business, consumers should know that if they do business with that particular lender, it is at their own peril,” the FCCPC boss stated.
He added that scrutinising the business of loan apps didn’t mean they controlled them but were aware of their policies.
“We know where they are. We know where to find them; when you complain about them, we know exactly where to get them and how to hold them accountable. They’ve already signed a pact with us about what they will and won’t do,” Irukera stated.
The ICIR reported that loan apps often send messages to contacts on their customers’ phones, threatening them with public shaming if they fail to compel the defaulting customers to repay the loan(s) they took.
Sometimes, they threaten the contacts with messages like, “Pay our money, or we shall report you to all your contacts”,” Last warning: pay up, or we lock you up,” ‘You have nowhere to run to; we are monitoring you,” etc.
The FCCPC recently announced that it had authorised 173 applications for digital lending nationwide. Fifty-four of these received provisional permits, while 119 received complete approvals. This action was required due to loan apps bullying Nigerians by sending offensive texts to their connections.
However, Nigerians have patronised loan apps despite their unconventional ways of recovering money.
These lenders act as platforms where borrowers can get quick loans with no collateral other than providing a bank verification number (BVN) and a request to access pictures and contacts on a potential customer’s phone.
Previous investigations by The ICIR show how illicit lending applications disobey Nigeria’s internet laws and humiliate borrowers for not repaying loans on time.
A reporter with the ICIR
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