Loan Apps: FCCPC Says New Regulation To Address Rising Debt Coming In 2024

The Federal Competition and Consumer Protection Commission (FCCPC) has said it would be developing a new regulatory framework to address Nigerians’ rising indebtedness to digital money lenders (DMLs), known as loan apps.

The Chief Executive Officer of the Commission, Mr. Babatunde Irukera, disclosed this on Monday while featuring on a TVC live program. Irukera noted that indebtedness to the DMLs has become a big industry issue.

According to him, while the Commission has succeeded in reducing abuse and harassment by the loan apps, Nigerians taking loans from the platforms have continued to default. Irukera said the rising debt could lead to the collapse of the digital lenders that are also playing critical roles in the economy.

The big issue
While noting that the reduction in the use of harassment and defamation of lenders by the loan apps has led to an increase in defaulting by the borrowers, Irukera said:

“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 and I’m 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’s 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’m hopeful that the future of what we’re building is that even school 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 boss added that once there is a systemic approach that prevents people from access to credit on account of their responsibility or otherwise, there would be self-regulation of people and then loan recovery. He said the Commission had found out that most people defaulting are the same taking loans from several other apps.