FCCPC Roles Out Fresh Regulations To Curb Digital Loans Default

Chief Executive Officer of the Federal Competition and Consumer Protection Commission (FCCPC), Dr Babatunde Irukera, has warned that his Commission might be compelled in the New year 2024 to role out regulations to check the rising cases of digital loan defaulters in Nigeria.

Irukera, who made this disclosure in Abuja, said the proposed fresh regulations would aid operators in the digital lending space in 2024 to improve loan recovery methods in the country in the face of rising default rates. He stated that presently, there are high levels of default from Nigerians, despite the reduced rate of harassment in the sector by the FCCPC.

The FCCPC boss 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.

“We must necessarily do the work no matter how hard it is to find a more sensible way to recover loans because I also agree that if these digital money lenders are unable to recover their loans and drop out of the market, it is a consumer protection problem because of those who need those types of short-term unsecured lending.

“So, we have to find the balance and so some of the regulations that will come out in 2024 will be a broader approach to responsible borrowing and responsible lending by individuals and corporates. I am hopeful that the future of what we’re building is that even schools, landlords would be able to report to a centralized credit system about the conduct of tenants, students, and parents so that we can know each person’s level of fiscal responsibility or credit wordiness.”

The FCCPC CEO, Irukera disclosed recently that it has reduced harassment and defamatory messages in the sector by about 80 per cent, adding that, “India, Kenya, Brazil, Ghana, and Uganda are still struggling in digital lending. Some of these countries are taking lessons from what we have done.”

Among the existing digital or Fintech companies operating in Nigeria that have complained of high rate of loan defaults among local borrowers include Moniepoint, Opay, Ease moni, Fair Monie, Easy Buy, etc.

However, digital loan customers have blamed the Fintech companies for being hugely responsible for the rate of loan defaults in the country. They argued that a situation where loans (though unsecured with tangible collateral assets like the bank loans) given by the digital companies come with outrageous or obnoxious interest rates and with very short repayment periods often leaves the borrowers with no option than to default.

“Are you saying, for instance, that a digital loan of about N50,000 (Fifty Thousand Naira Only) granted with a repayment interest of N20,000 (Twenty Thousand Naira Only) or N25,000 (Twenty Five Thousand Naira Only) and to be repaid within a week or two weeks may not likely end up in default?”, queried Mr Adekunle Saka, adding that, “Therefore, if the digital loan company want the rate of defaults to reduce, the FCCPC should also look into the level of repayment interest charges on these loans.

“It is not enough to say people are defaulting in paying back back their digital loans. The question is: what is length of time or period given to these people to repay what they have borrowed? These loan companies are sharks! Their greed is just out of this world.

“How can you give somebody a loan to do business and expect him to pay back in just about five working days or one week and with outrageous interest? Why won’t the debtor default in repaying? It is a two-way thing and l think the FCCPC should look into this matter very carefully before coming out with whatever regulations, if not, they will end up compounding things for both parties and for the Commission itself”, Kaka advised.