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The Federal Competition and Consumer Protection Commission (FCCPC) has revealed plans to establish a comprehensive regulatory framework to tackle the issue of increasing indebtedness among Nigerians using digital money lenders (DMLs), commonly known as loan apps.
Mr. Babatunde Irukera, the CEO of the Commission, highlighted the escalating concern of indebtedness to Digital Money Lenders (DMLs) as a significant industry issue. While acknowledging the success of the Commission in mitigating abuse and harassment by these loan apps, he emphasized that instances of default persist among Nigerians availing loans from these platforms.
Irukera stated that the implementation of the interim framework resulted in an 80% reduction in harassment and defamatory messages from loan apps. However, despite this success, he expressed dissatisfaction with the remaining 20% and emphasized the need to address it comprehensively.
He noted that the decrease in harassment and defamation practices by loan apps has inadvertently led to a surge in defaults by borrowers, posing a potential threat to the viability of digital lenders. DMLs, playing crucial roles in the economy, are at risk of collapse due to the mounting debt crisis.
Irukera stressed the importance of finding a more sensible way to recover loans, stating that abusing borrowers is not the only effective approach. He highlighted the need for a balanced regulatory framework for responsible borrowing and lending. The FCCPC aims to introduce broader regulations in 2024 to address responsible borrowing and lending by individuals and corporations.
To prevent defaults, Irukera emphasized the necessity of a systemic approach to credit accessibility, particularly given that most defaulters take loans from multiple apps. The FCCPC has registered over 200 loan apps under the interim regulatory framework, working to clean up the digital lending market and eliminate unethical practices such as defamation and harassment of borrowers. A total of 211 digital lenders have received approval from the commission.
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