In 2021, the National Information Development Technology Agency ("NITDA") issued a fine of 10 Million Naira against Soko Lending Company (a digital lending company) after receiving over 40 petitions on the abuse of personal data by the lending company.1 Due to the rising complaints about the abuse of customers' rights, the NITDA consequently collaborated with the Federal Competition and Consumer Protection Commission ("FCCPC") for the protection of the rights of Consumers. The FCCPC had since then (together with the Inter-agency Joint Regulatory and Enforcement Task Force2) imposed and enforced several sanctions on digital lending companies for breach of consumer rights.
On August 18, 2022, the FCCPC issued the "Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending 2022" (the "Framework") further to its enabling Act3, which would allow the FCCPC regulate the digital lending space.
Who does the Framework apply to?
The Framework was issued and aimed at any company intending to carry on the business of digital lending in Nigeria.
Potential Conflict with the BOFIA 2020
Upon review of the Framework, it would appear that the Framework seeks to apply to all digital lending companies irrespective of their enabling license. In view of provisions of the Bank and Other Financial Institution Act 2020 ("BOFIA"), however, the intention of the FCCPC to regulate institutions licensed by the Central Bank of Nigeria ("CBN") conflicts with the provision of section 65 of the BOFIA. Specifically, section 65 restricts the Federal Competition and Consumer Protection Act 2019 (FCCPA)4 from applying to the services of banks and other financial institutions.
Provisions of the Framework
- The Framework requires digital lending companies to apply to the FCCPC for registration by completing the FCCPC Interim Digital Lending Guidelines Form 001. The FCCPC will further request for specific information on the lending business of the company such as:
- the name and contact address of the business in Nigeria;
- The identity and nationality of the promoters, directors, nominee directors, secretaries, and key officials;
- the source of funding including the nature of the instrument, identity, nationality and nature of business of the source;
- any affiliations the lending company has with any company whether in Nigeria or abroad including parent companies, subsidiaries, associate companies etc;
- the license authorizing the business;
- a list of its digital application used in its operation;
- the interest rate and applicable fees including the method of
- The Framework also requires lending companies to prepare and submit the following documents together with their application for registration.
- Incorporation documents.
- An organogram showing its key officers.
- Contact information of the staff authorised to accept correspondence.
- Service level agreement with its service providers relating to operations.
- Evidence of feedback and complaint mechanism.
- The lending company is expected to appoint a representative who will relate with the FCCPC and act on behalf of the company.
Whilst the Framework is an interim instrument, the intention is to ensure that all digital lending companies are governed by a single regulatory regime in view of consumers' rights.
The Framework, however, does not provide clear rules for digital lending companies to comply with. It is expected that upon release of the final regulation, the rules of the FCCPC will be adequately spelt out and CBN licensed institutions will be exempted from the Framework.
1. See the NITDA press release < https://nitda.gov.ng/nitda-collaborates-with-the-federal-competition-and-consumer-commission-fccpc-to-tackle-data-abuse-by-money-lending-operations/ >
2. An inter-agency Joint Regulatory and Enforcement Task Force was formed constituting the FCCPC, NITDA, Independent Corrupt Practices Commission (ICPC) etc.
3. The Federal Competition and Consumer Protection Act 2019 ("FCCPA")
4. The enabling law of FCCPC
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