The Federal Competition and Consumer Protection Commission (FCCPC) yesterday barred all financial technology companies (Fintechs) to stop providing payment or transaction services to digital money lenders under its investigation.
Some of the FinTechs barred from offering such services included; Flutterwave, Opay, Paystack and Monify.
Chief Executive Officer and Executive Vice Chairman of the commission, Mr.Babatunde Irukera, handed down the warning to Fintechs during an enforcement raid on some of the digital money lenders in Lagos yesterday
Irukera added that the commission would not hesitate to wield the big stick against Fintechs that make their operating payment systems and providing services to such digital lenders under its investigation or operating without applicable regulatory approvals
This was even as he said the commission has also directed telecommunication and technology companies which include Mobile Network Operators (MNOs) to stop providing server, hosting or other key services such as connectivity to such disclosed or known lenders.
According to him, the Federal High Court empowers the commission to search and seize properties from premises of targets and subjects of investigation.
He added that the nod by the Court compelled the commission to enforce the law against a company, widely known as Soko Lending Ltd.
“The information available to the commission demonstrates that Soko Lending appears to be the most consequential digital money lender with multiple apps and brand names.
“It is covering a significant share of the digital or online lending market, and one of the most prolific actors in violating consumer privacy, fair lending terms and ethical loan repayment/recovery practices.
“Prior to this operation, the commission had previously, on March 11, 2022 carried out a similar enforcement action with respect to multiple lenders; which action and continuing investigation has reduced previously high and escalating unethical, obnoxious and unscrupulously exploitative practices in the industry,” he said.
He disclosed that some of the lenders who had been subject of investigation had devised dubious strategies to leverage on technology and other financial services alternatives to circumvent account freezing and app suspension orders.
“With the raid today, the commission expects appreciable and additional reduction in these unacceptable practices.
“The commission has also today entered further Orders that will disable or diminish violators’ ability to devise circumvention efforts or alternative mechanisms to circumvent the objective of the investigation and protection of citizens,” Irukera added.
According to him, the Order requires permission to proceed in digital lending; it provides a limited moratorium period for existing businesses to comply in order to continue in digital lending.
“The guidelines also mandate different service providers in the relevant ecosystem such as banks, access/download platforms or stores, technology providers and payment systems to require regulatory approval before providing services.
“The commission expresses its gratitude to victims and citizens who have provided information or contributed to the investigation; and welcomes the continuing engagement that provides the relevant information or intelligence through the already established and publicised channels,” the FCCPC boss said. (Daily Sun)
