FG introduces new rules for loan apps to protect borrowers

These new rules apply to a wide range of operators, including loan apps, fintechs, mobile money operators, agricultural platforms extending inputs on credit, retailers offering instalments, and even telecommunications companies providing airtime and data advances. Foreign-based apps targeting Nigerians are also covered.

So not only cash loans, but also credit extended in the form of airtime, mobile data, cashback, services, or barter, so long as such transactions involve a specific or verifiable monetary value falls under the new rule.

What are the new rules protecting borrowers?

1. Based on the new rules, Lenders must fully disclose all terms of service to consumers, including interest rates, repayment conditions, and applicable charges. These terms may only be altered if expressly allowed in the lending agreement.
2. All advertisements must be accurate, clear, and easy to understand, free from offensive, misleading, or deceptive content.
3. Consumers must be treated fairly and equitably at every stage of engagement.
4. Lending agreements must not contain unfair terms that create an imbalance of rights or cause direct or indirect harm to consumers.
5. Business must be conducted responsibly, professionally, and ethically at all times. Consumers must be promptly informed of any changes in circumstances that could affect their service terms.
6. Credit advances must only be provided on an opt-in basis.
7. Lenders are barred from accessing borrowers’ contact lists, call logs, and photos practices that had sparked outrage after some platforms used them to shame defaulters.

Penalties for lenders

Lenders that breach the new regulations face tough penalties. Individuals could be fined up to N50 million, while companies risk fines of up to N100 million or 1% of their annual turnover, whichever is greater.

Sanctions may also target company executives, with directors facing potential bans from holding board positions for as long as five years. Beyond consumer protection, the rules require lenders to conduct proper credit assessments to ensure borrowers can repay loans responsibly.

In severe violations, the FCCPC reserves the power to revoke a lender’s licence, suspend operations, or delist the institution entirely. Federal government approves over 100 new loan apps READ ALSO Nigerian insurance act: Public building owners face fines, jail time for non-compliance Earlier, Legit.ng reporetd that the federal government, through the Federal Competition and Consumer Protection Commission (FCCPC), has approved over 100 new loan applications in the past 12 months.

FCCPC website showed that there are a total of 322 fully approved loan apps in Nigeria as of Wednesday, February 19, while those with conditional approvals were 42. The commission has also removed about 47 loan applications from its listings, and 16 were given outright approval by the CBN

Source: Legit.ng