The Federal Competition and Consumer Protection Commission (FCCPC) has said a comprehensive ban on loan applications due to their “unworkable” operation may not resolve issues.
The Commission’s CEO, Babatunde Irukera, told the media that banning these apps would not solve the issues because they may be used worldwide.
Mr. Irukera said a ban wouldn’t help because many other countries have the same issues, and it would merely demonstrate strength.
Some authorized lenders have created new apps to continue their wrongdoing. If a corporation does this, it will be removed from the country’s loan application list.
For instance, banning an industry that can work remotely and adapt may not be the best solution. Bans are meaningless. Thus, the commission’s CEO advises consumers and authorities to work together to detect and stop industrial illegalities.
He went on to say that we must all work together to find and stop illegal activity in this industry.
This takes long-term effort and constant vigilance from both consumers and regulators since regulators can’t have all the information they need to track these businesses. Former victims often back outright bans, but that’s not enough to make policy on.
He also said that under an administration whose goal and focus is to spread prosperity to the poorest people, reduce poverty, and give vulnerable people more power, regulators must focus on the hard work and road to reach those goals, not the supposedly easy approach of blanket bans and grandstanding.
Read also: Nigeria Consumer Protection body to petition Google on loan Apps harassment
Loan apps have been clamped down for months
In the past few months, the Federal Government has paid a lot of attention to and looked closely at the Nigerian loan app business.
A study from ICIR shows that most Nigerian loan applications don’t have to follow any rules. This means that debt collectors can use unusual methods to get people who haven’t paid back their loans to do so.
The government has been keeping a close eye on loan apps, especially after people raised concerns about them. In April of this year, 173 digital lending companies were given permission to work in Nigeria by the Federal Competition and Consumer Protection Commission (FCCPC).
Out of these, 119 have obtained full approvals, while 54 have conditional approvals. The FCCPC’s process for registering and approving loan applications is meant to protect Nigerians from any scams that might be connected to them. This isn’t surprising since there have been many reports of abuse by these apps, which led the commission to act quickly.
The FCCPC put out the “Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending 2022” to control digital lending and make sure people are held accountable. With this system, companies that want to do business in the digital lending space must register and get permission from the commission. The goal is to make things better for borrowers and keep them from being taken advantage of.
Google Takes Action Against Illegal Loan Apps In Kenya, Nigeria
In response to the FCCPC’s worries, Google changed the rules about Personal Loans on the Play Store. With this update, loan apps won’t be able to access private user information like photos, videos, external storage, contacts, exact location, and call logs. Google’s move is meant to protect people from some lenders’ possibly predatory lending practices, which have led to borrowers being harassed.
Overall, it is hard to ban the loan app industry. The Nigerian government, through the FCCPC, and tech giant Google are taking steps to deal with the problems with loan apps and protect consumers from any unfair practices.