The news:
The Federal Competition and Consumer Protection Commission (FCCPC) has ordered the drawdown of Maxi Credit, Here4U, ChaCha and SoftPay from Google Playstore and/or whatever platforms they are currently hosted on.
Operating payment systems such as Flutterwave, Opay, Paystack and Monify and telecommunication/technology companies have also been adviced to desist from providing payments or transaction services, server/hosting or other key services to lenders under investigation without applicable regulatory approvals.
How it Began:
August 17, 2021
Soko Lending Company Limited was sanctioned by the National Information Technology Development Agency (NITDA) after series of complaints were leveled against the company on the grounds of unauthorized disclosures, failure to protect customers’ personal data and defamation of character as well as failure to carry out the necessary due diligence as enshrined in the Nigeria Data Protection Regulation (NDPR).
A monetary sanction of N10 million was imposed on the company as well as a 9-month mandatory information technology and data protection oversight. It was therefore expected that the company would lay low until the investigations and rectification procedures were concluded but, the reverse was the case.
August 18, 2022
In a statement published by the Federal Competition and Consumer Protection Commission (FCCPC), the Commission relayed that based on their intel, “Soko Lending appears to be the most consequential digital money lender with multiple apps and brand names covering a significant share of the online money market as well as one of the most prolific actors in violating consumer privacy, fair lending terms and ethical loan repayment/recovery practices.”
What the FCCPC Executive Vice Chairman is saying:
Mr Babatunde Irukera, during a media briefing with journalists on Thursday in Lagos said: “Prior to this operation, the commission had previously, on March 11, 2022 carried out a similar enforcement action with respect to multiple lenders; which action and continuing investigation has reduced previously high and escalating unethical, obnoxious and unscrupulously exploitative practices in the industry.’’
The Vice Chairman also noted that some of these online lenders who had been subject of investigation had devised methods to leverage on technology and other financial services alternatives to circumvent account freezing and app suspension Orders.
He said, “With the operations today, the commission expects appreciable additional reduction in these unacceptable practices.“The commission has also today 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.’’
Going forward, he said the Order requires permission to proceed in digital lending and provides a limited moratorium period for existing businesses to comply in order to continue in digital lending.
Moving Forward:
To promote fair, transparent and mutually beneficial alternative lending opportunities, 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.
It requires permission to proceed with digital lending, provides a limited moratorium period for existing businesses to comply in order to continue in digital lending. The guidelines also mandates different service providers in the relevant ecosystem (such as Fintech companies, telecommunication providers, banks, etc) to require regulatory approval before providing services.
