In exercise of its powers under sections 17, 18 and 163 of the Federal Competition and Consumer Protection Act (FCCPA), 2018, the Federal Competition and consumer Protection Commission (FCCPC) in August 2022, released the Limited Interim Regulatory/Registration Framework and Guidelines for Digital lending, 2022 as part of its efforts to checkmate the excessiveness of digital lenders in Nigeria.
This is against the backdrop of the controversies that has hovered around the digital lending space recently which has become a subject of great concern for both customers and regulators owing to the crude and unprofessional methods often employed by some digital lenders in their loan recovery efforts. These includes social shaming, breach of data privacy rights, stringent lending terms, criminal defamation, threat to life, etc.
In this short piece, the FCCPC's Interim Regulation, 2022 has been reviewed with the aim to examine its applicability and enforcement in line with other extant laws on the subject matter.
A REVIEW OF THE INTERIM GUIDELINES, 2022
Under the FCCPC's 2022 Guidelines, digital lenders are compelled to download and complete the INTERIM DIGITAL LENDING GUIDELINES FORM 0011 and attach the following documents:
- Certified copy of the certificate of incorporation of the applicant;
- A brief description of the business of the Applicant and where relevant, their groups;
- Organogram showing role players and location of key role players and any operational approving authorities/person
- Name and address of a person within the business who is authorized to accept all correspondence and accept service on behalf of the business;
- Evidence of membership in any trade or professional associations;
- Any service level agreements with any service providers with respect to operations but excluding administration;
- Evidence of feedback and complaint resolution mechanism;
- Evidence of tax payments or tax waivers where applicable;
- All applicable fees associated with service; and
- A duly signed and executed FCCPC INTERIM DIGITAL LENDING GUIDELINES FORM 002 - Declaration for Digital Lending Businesses in Nigeria.
AREAS OF CONFLICT WITH OTHER EXTANT LAWS
The release of the FCCPC's Interim Guidelines, 2022 generated controversies due to the conflict between the provisions of the FCCPCA and the Banks and Other Financial institutions Act (BOFIA), 2020.
Section 104 of the FCCPA, 2018 provides thus:
"Notwithstanding the provisions of any other law but subject to the provisions of the Constitution of the Federal Republic of Nigeria, in all matters relating to competition and consumer protection, the provisions of this Act shall override the provisions of any other law"2
However, section 65 of the BOFIA makes the following provisions:
"The provisions of the Federal Competition and Consumer Protection Act shall not apply to-
- any function, act, financial product, or financial services issued or undertaking, and transaction howsoever described by a bank or other financial institutions licensed by the Bank; and..."3
Based on the foregoing, it is apparent that there is a conflict between the highlighted provisions of the BOFIA and FCCPA.
However, it is settled law that where there appears to be a conflict between a specific sttute and a general one, the special statute shall prevail. See the case of INDEPENDENT TELEVISION/RADIO V. EDO STATE BOARD OF INTERNAL REVENUE4 where it was held thus:
"Where there is conflict between two legislations, one of which is special on a subject and the other legislation is general in nature, the legislation that is special in nature shall supersede the former"
It is humbly submitted that the BOFIA is a special statute that relates to financial organizations only and thus by law takes precedence over the FCCPA.
Furthermore, the law is clear on which takes precedence between a former and latter legislation where there exists conflict between both laws. See the case of Ziza v. Mamman5 where the appellate court held that:
"Where there is a conflict between an earlier and a latter provision in an enactment, the latter provision of the enactment supersedes the former provision. This is moreso where the latter provision is specific"
See also the case of Crownstar Co Ltd v. The Vessel MV Vali6 where it was held that:
"Where there is a conflict between a previous statute and a later one the rule is that the later one should be preferred, subject to the first duty of the court, if the result is fairly possible to give effect to the whole expression of the parliamentary intention......"
See also the case of A.-G Anambra State v. A.-G. Federation.7
Based on the highlighted decisions, it is apparent that the BOFIA is the most recent of both laws. Also, it is a specific legislation as it operates to regulate banks and other financial organizations only which sphere digital lending activities fall under. Therefore, it should by the reasons adduced above take precedence over the FCCPA.
The controversies generated following the FCCPC's Limited Interim Regulatory/Registration Framework and Guidelines for Digital lending, 2022 is still hovering as same is yet to be resolved. While FCCPC's step is to curtail the excessiveness of some digital money lenders whose fragrant abuse of consumer rights is staggering, it is believed that both the FCCPC and the CBN could work together to achieve that without leaving the general public and stakeholders in confusion as to who actually has the mandate to regulate the activities of digital lending in Nigeria.
Also, while it could be argued that the FCCPC has no regulatory power over financial institutions and digital lenders based on the provision of section 65 of the BOFIA, it is humbly submitted that the Interim Regulation would apply to digital money lenders who are not licensed by the CBN and merely operating with individual state's Money Lenders License.
1 The form can be downloaded at https://fccpc.gov.ng/wp-content/uploads/2022/08/LIMITED-INTERIM-REGULATORY_-REGISTRATION-FRAMEWORK-FOR-DIGITAL-LENDING-2022-1.pdf
2 Section 104 of the FCCPA, 2018
3 Section 65 of the BOFIA, 2020
4 (2015) 12 NWLR (PT. 1474) 442
5 (2002) 5 NWLR (Pt. 760) 243
6 (2001) 1 NWLR (Pt 639) 37
7 (1993) 6 NWLR (Pt 302) 692 at 713 - 714 referred to] (P. 62, paras. B-D)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.