Federal Govt Orders Fintechs To Halt Services Of Unregistered Online Lenders

The Federal Competition and Consumer Protection Council (FCCPC) has ordered all operating payment systems to immediately cease and desist from providing payment or transaction services to unregistered online money lenders under investigation or those operating without regulatory approvals.

The executive vice chairman/chief executive, Federal Competition and Consumers Protection Commission (FCCPC), Babatunde Irukera, hinted that, the commission has also ordered telecommunication and technology companies including Mobile Network Operators (MNOs) to cease and desist from providing server/hosting, or other key services such as connectivity to disclosed or known lenders who are targets and subjects of investigation or otherwise operating without regulatory approval.

In an enforcement exercise, it clamped down on an unregistered online lending firm known as Soft pay affiliated with a notorious digital money lender, Soko lending.

He said, the move is in line with the operation that the commission had previously embarked on earlier in the year with respect to multiple lenders; which action and continuing investigation, he said, has reduced previously high and escalating unethical, obnoxious and unscrupulously exploitative practices in the industry.

“The information available to the commission demonstrates that Soko Lending appears to be the most consequential digital money lender with multiple apps and brand names covering a significant share of the digital/online lending market, and one of the most prolific actors in violating consumer privacy, fair lending terms and ethical loan repayment/recovery practices,” he said.

He, however, stated that some of the lenders who have been subject of investigation have devised methods to leverage on technology and other financial services alternatives to circumvent account freezing and app suspension orders.

He added that the enforcement actions and in furtherance of the desire to promote fair, transparent and mutually beneficial alternative lending opportunities apart from traditional lending to consumers, 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.

“This becomes enforceable immediately. It requires permission to proceed in digital lending; it provides a limited moratorium period for existing businesses to comply in order to continue in digital lending. The Guidelines also mandate different service providers in the relevant ecosystem (such as banks, access/download platforms or stores, technology providers and payment systems) to require regulatory approval before providing services,” he said.

He added: “the Commission expresses its gratitude to victims and citizens who have provided information or contributed to the investigation; and welcomes the continuing engagement that provides the relevant information or intelligence through the already established and publicised channels.”

The FCCPC boss expressed hope that with the enforcement operations carried out so far, the vommission expects appreciable additional reduction in these unacceptable practices by these unregistered digital money lenders.