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Govt embargoes services for lending firms under investigation

By Adaku Onyenucheya
19 August 2022   |   4:00 am
The Federal Government has ordered Flutterwave, Opay, Paystack, Monify and other operating payment systems to immediately cease transacting with online lending firms that are either under investigation or not duly registered.

Director General, FCCPC, Babatunde Irukera

The Federal Government has ordered Flutterwave, Opay, Paystack, Monify and other operating payment systems to immediately cease transacting with online lending firms that are either under investigation or not duly registered.

Federal Competition and Consumer Protection Commission (FCCPC) also directed Mobile Network Operators (MNOs) not to host and disclose identities of Nigerians to the affected lenders.

Its Executive Vice Chairman/Chief Executive Officer, Babatunde Irukera, who gave the directive during the commission’s inter-agency Joint Regulatory and Enforcement Task Force’s action on digital money lending firms across Lagos State, yesterday, also commanded app stores to immediately dismantle apps of the questionable lending firms.

Irukera said the enforcement is in furtherance of a continuing investigation and fresh intelligence emanating from significant period of surveillance and renewed orders of the Federal High Court empowering the commission to search and seize properties from premises of targets and subjects of investigation.

He stated that the digital money lending firms do not have regulatory approvals to operate, thus violating consumer privacy, fair lending terms and ethical loan repayment/recovery practices.

Irukera pointed that following the previous enforcement in March this year, where some of the lending firms were raided and are currently undergoing investigation, the lenders have devised methods to leverage technology and other financial services alternatives to circumvent account freezing and app suspension orders.

He said one of the lending firms, widely known as Soko Lending Limited, upon information available to FCCPC, 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.

The chief executive observed that the firm was one of the most prolific actors in violation of consumer privacy, fair lending terms and ethical loan repayment/recovery practices.

He added that the enforcement, ongoing investigations and court orders have reduced the previously high unethical, obnoxious and unscrupulously exploitative activities in the industry.

According to him, the orders would diminish violators’ ability to devise circumvention efforts or alternative mechanisms to circumvent investigation and protection of citizens.

Irukera said besides enforcement and in furtherance of the desire to promote fair, transparent and mutually beneficial alternative lending opportunities, the inter-agency task force had developed and mutually adopted a Limited Interim Regulatory/ Registration Framework and Guidelines for Digital Lending, 2022.

The FCCPC boss stated that the move was an interim step to establishing a clear regulatory framework congenial to prompt enforcement.

“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 ecosystem such as banks, access/download platforms or stores, technology providers and payment systems to require regulatory approval before providing services,” he explained.