The federal government has explained why its agencies are shutting down some illegal online banks as they step up their crackdown on unlicensed online money lenders across the country.
It comes months after the government set up a joint committee to investigate rights abuses and unfair practices in the money lending industry and subsequently shut them down.
The federal government has said that these money lenders who are not registered with the Commercial Affairs Commission (CAC) are engaging in activities that violate the rights of Nigerian consumers.
This was made known by the Vice President/Director General of the Federal Competition and Consumer Protection Commission (FCCPC), Mr. Babatunde Irukera, during an enforcement exercise against a loan company. money in Lagos.
- Irukera, who led a team of Nigerian police officers and men in the enforcement exercise, frowned on breaching people’s confidentiality in how these lenders collect loans.
- He said the interest rate charged by these online financial institutions seems to violate the ethics of how loans are made.
- Going further, the FCCPC boss said investigations revealed that the loan companies were neither Nigerian companies nor registered in the country as most of these companies operate from the same location and are operated by the same person.
What the FCCPC CEO says
Irukera said the commission got information about online money lenders during the COVID-19 lockdown in 2020, which led to the creation of many of them.
He said, “More so, because people were in lockdown due to the pandemic, people started needing small, easy loans, which is understandable.
“However, over time people started complaining about the malpractice of the lenders. So we started following him.
“The two main areas of concern were what appears to be shaming and shaming, an invasion of people’s privacy in terms of how these lenders collect loans.
“Second, the interest rate seems to be an ethical breach of how loans are made. So those are the two things we looked for.
“We launched an investigation to try to determine the location of these people and it was a very difficult thing.
“We did this for several months and so one of them moved from place to place and we have been visiting this place for months.”
Irukera said the commission found that most of the businesses are operating from the same location and in fact by the same person, adding that these unlicensed online money lenders in Nigeria do not have addresses in the country. and are not registered in Nigeria with the CAC nor have any license to do business.
What you should know
- Recall that earlier in November 2021, the federal government decided to verify some of the illegal, unsound and unfair practices in the money lending sector with the establishment of a joint committee to remedy the situation.
- The committee, which received more than 500 emails and information regarding the investigation, was expected, through its activities, to lead efforts to combat multiple potentially questionable behaviors by some lenders, otherwise known as loan sharks.
- In December 2021, the FCCPC had announced that the joint committee set up by the federal government to combat the violation of consumer rights and unfair practices in the money lending industry would close illegal businesses at the start of its application.
- The joint committee is made up of representatives from the FCCPC, CBN, Economic and Financial Crimes Commission (EFCC), National Information Technology Development Agency (NITDA) and the National Human Rights Commission. man (NHRC).