Amid poor practices and relentless harassment by some digital loan companies, which they have refused to shut down despite complaints from members of the public and several warnings from watchdogs, the feds have moved to shut down their operations. using telecommunications operators and financial service providers.
The Federal Competition and Consumer Protection Commission, FCCPC, has ordered payment system operators, PSOs, such as Flutterwave, Opay, Paystack and Monify, as well as telecommunications 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 revealed in Lagos by FCCPC Executive Vice President/General Manager Babatunde Irukera on Thursday during the legal action against Soko Lending Limited, a notorious loan shark guilty of the aforementioned malparctics.
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“The FCCPC has also ordered telecommunications/technology companies (including mobile network operators (MNOs) to cease and desist from providing servers/hosting or other key services such as connectivity to disclosed lenders or who are targets/subjects of investigation or otherwise operate without regulatory approval,” he said.
Regulating digital loan companies has been a challenge as they are unregistered and many of them operate from no known office. They also manipulate systems to evade regulatory efforts.
Irukera said the FCCPC has obtained orders to disable or diminish the ability of violators to circumvent regulatory efforts to protect citizens. Further, he disclosed that a Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending have been developed and adopted by the Joint Interagency Regulatory and Enforcement Working Group as a intermediate step to establish a clear regulatory framework for the sector.
“Soko Lending appears to be the largest digital money lender with multiple apps and brand names covering a significant portion of the digital/online lending market, and one of the most prolific players in privacy breaching consumers, fair lending terms and ethical loan repayment/recovery practices.
“The Commission has also made other orders that will disable or diminish the ability of violators to devise circumvention efforts or alternative mechanisms to circumvent the purpose of investigation and citizen protection,” he said.
Irukera noted that previous efforts to reduce exploitative practices in the industry have been thwarted by some of the lenders who have devised methods to circumvent account freezing and application suspension orders.
“In particular, the Commission ordered all payment systems in operation, including Flutterwave, Opay, Paystack and Monify, to immediately cease providing payment or transaction services to lenders under investigation or not otherwise functioning with applicable regulatory approvals.
“The Joint Interagency Regulatory and Enforcement Working Group has developed and mutually adopted a Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending, 2022 as a first interim step towards establishing ‘a clear regulatory framework,’ he said.
The development is a huge reprieve for consumers who have been weighed down by the reckless actions of digital lending platforms. Loan sharks use defamation, blackmail and other vices to compel their debtors to pay even when they have not defaulted.