CEM REPORT | The Federal Competition and Consumer Protection Commission (FCCPC), has directed all financial technology companies (FinTechs) to cease offering its service to online money lenders under its investigation.
According to the Executive Chairman of FCCPC, Mr Babatunde Irukera, the online lenders under its investigation violate consumer privacy, fair lending terms and ethical loan repayment/recovery practices.
The FCCPC boss speaking with journalists while on an enforcement exercise on some of the digital money lenders in Lagos noted that FinTechs such as Flutterwave, Opay, Paystack and Monify were operating payment systems and providing services to such online lenders or not operating with applicable regulatory approvals.
“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.
“It is covering a significant share of the digital or online lending market and is one of the most prolific actors in violating consumer privacy, fair lending terms and ethical loan repayment/recovery practices.
“Prior to this operation, the commission had previously, on March 11, 2022, carried out a similar enforcement action with respect to multiple lenders; which action and continuing investigation has reduced previously high and escalating unethical, obnoxious and unscrupulously exploitative practices in the industry.’’
Irukera, while noting that some of these online lenders who had been subject of investigation had devised methods to leverage technology and other financial services alternatives to circumvent account freezing and app suspension Orders called on telecommunication and technology companies which include Mobile Network Operators (MNOs) to stop providing server, hosting or other key services such as connectivity to such disclosed or known lenders.
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“With the operations today, the commission expects an appreciable additional reduction in these unacceptable practices.
“The commission has also today entered further Orders that will disable or diminish violators’ ability to devise circumvention efforts or alternative mechanisms to circumvent the objective of the investigation and protection of citizens.’’
Furthermore, he said “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.
“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.’’
Earlier in March, the FCCPC shut down some illegal online money lending banks for not registering with the Corporate Affairs Commission (CAC) and engaging in activities against the rights of Nigerian consumers.
The FCCPC claimed that the lending companies offer short-term loans to help subscribers meet urgent needs, but resort to unprofessional measures of harassment, cyberbullying, and breach of data privacy of their customers who may have defaulted on loan repayment.
The FCCPC added that these online banks charged interest rates that violate the ethics of how lending is done and was involved in naming and shaming which is a violation of people’s privacy with respect to how these lenders recover loans, among other violations
Some of the affected online money lending banks include; GoCash, Okash, EasyCredit, Kashkash, Speedy Choice and Easy Moni.
The commission also ordered Google and Apple to enforce the withdrawal of these money lending applications from their stores where evidence of inappropriate conduct or use of the application in violation of the rights of consumers has been established.