The Federal Competition and Consumer Protection Commission (FCCPC) has announced its intention to introduce additional regulations for operators in the digital lending sector in 2024.

The aim is to address the rising default rates in the country and enhance loan recovery methods. Despite a reduced rate of harassment in the sector by the FCCPC, there has been a significant increase in loan defaults among Nigerians.

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Babatunde Irukera, the Chief Executive Officer of the Commission, highlighted the challenges of unethical and inappropriate loan recovery mechanisms contributing to the high default levels.

He emphasized the need for a more sensible and responsible approach to loan recovery, rejecting the notion that abusing consumers is the only effective method.

Irukera stated, “We must necessarily do the work no matter how hard it is to find a more sensible way to recover loans because I also agree that if these digital money lenders are unable to recover their loans and drop out of the market, it is a consumer protection problem because of those who need those types of short-term unsecured lending.”

The upcoming regulations in 2024 will adopt a broader approach to encourage responsible borrowing and lending practices by both individuals and corporations.

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Irukera expressed hope that the regulations would contribute to building a system where even landlords of school premises could report to a centralized credit system about the financial conduct of tenants, students, and parents.

The FCCPC recently reported an 80% reduction in harassment and defamatory messages within the sector.

Irukera mentioned that countries such as India, Kenya, Brazil, Ghana, and Uganda are still grappling with challenges in digital lending, with some seeking lessons from the measures taken by the FCCPC.