The Federal Competition and Consumer Protection Commission (“FCCPC”) has in the exercise of its powers under its enabling law, ventured into the regulation of digital lending business in Nigeria. Recently, in exercise of the powers conferred upon it by sections 17, 18 and 163 of the Federal Competition and Consumer Protection Act, 2018 (“the FCCP Act”), and all other powers enabling it in that behalf, the FCCPC issued the Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending, 2022 (“Guidelines for Digital Lending 2022”).
According to FCCPC, the Guidelines for Digital Lending 2022 was developed and adopted by the Joint Regulatory and Enforcement Task Force as a temporary step to establishing a clear regulatory framework for the lending space. The Guidelines for Digital Lending 2022 provides for a mandatory registration of digital lenders with the FCCPC and sets out the registration requirements and additional regulatory approval of the FCCPC to carry out the business of digital lending in Nigeria.
Also, the Guidelines for Digital Lending 2022 provides that every applicant seeking to register with the FCCPC must present an evidence of membership of a trade or professional association. This presupposes that a digital lender must register with the Money Lenders Association the same way Finance Companies register with Finance Houses Association of Nigeria or Microfinance Banks with the National Association of Microfinance Banks.
Requirements for Registration with the FCCPC
The list of documents that are required to accompany a digital lender’s application to the FCCPC are as follows:
i. Certified copy of the certificate of incorporation of the applicant company;
ii. A brief description of the business of the applicant company and where relevant, their groups;
iii. Organogram showing role players and location of key role players and any operational approving authorities/person;
iv. Name and address of a person within the business who is authorized to accept all correspondence and accept service on behalf of the business (e.g. Compliance Officer or Data Protection Officer or Managing Director of the company);
v. Evidence of membership in any trade or professional associations (e.g. the Money Lenders Association);
vi. Any service level agreements with any service providers with respect to operations but excluding administration (e.g. agreement with a credit bureau or agreement with debt recovery company, etc.);
vii. Evidence of feedback and complaint resolution mechanism;
viii. Evidence of tax payments or tax waivers where applicable;
ix. All applicable fees and charges associated with service;
x. Terms of Use or Loan Contract;
xi. Privacy Policy;
xii. Code of Conduct;
xiii. Evidence of compliance with FCCPC Interim Digital Lending Guidelines Form 001; and
xiv. FCCPC Interim Digital Lending Guidelines Form 002 (Declaration for Digital Lending Businesses in Nigeria)
Please note that upon submission of the above requirements to the FCCPC, the FCCPC will reply with a letter of additional requirement. The FCCPC will direct the company to obtain and submit a data privacy audit report from the Nigerian Data Protection Bureau (NDPB) on the company’s privacy policy. The FCCPC will give an approval after a successful review of the application.
Cost of Registration of Digital Lenders with the FCCPC
Undoubtedly, the Guidelines for Digital Lending 2022 has introduced additional requirements for setting up a digital lending company in Nigeria and increased the number regulatory approvals and reporting obligations for digital lenders. It is no gainsaying that the Guidelines would naturally increase the cost of doing digital lending business in the country.
It is noteworthy that section 163(1)(c) of the FCCP Act empowers the FCCPC to make regulations on fees, administrative penalties, charges or levies and such other related matters. The cost of registering a loan App with the FCCPC is N500,000 (Five Hundred Thousand Naira) subject to a maximum of 3 loan Apps per company.
Please note that the Guidelines for Digital Lending 2022 imposed the obligation to obtain the audit report from the Nigerian Data Protection Commission as a precondition for registering with the FCCPC.
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