Digital loan providers may incur penalties of up to ₦100 million due to immoral practices under the revised regulations set by the Financial Counter-Caption of Credit and Protection Commission (FCCPC)

Digital loan providers may incur penalties of up to ₦100 million due to immoral practices under the revised regulations set by the Financial Counter-Caption of Credit and Protection Commission (FCCPC)

New Digital Lending Regulations Introduced in Nigeria

The Federal Competition and Consumer Protection Commission (FCCPC) in Nigeria has announced new regulations for digital consumer lending, aimed at addressing abusive lending practices, strengthening consumer protection, and bringing greater oversight and transparency to the rapidly growing digital lending market.

The new regulations, contained in the Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations, 2025, seek to regulate the $2.1 billion consumer lending market in Nigeria [1][2][3].

Key Features of the Regulations

• Penalties: Companies face fines up to ₦100 million or 1% of their annual turnover for violations. Individuals, including directors involved in misconduct, can be fined up to ₦50 million and banned from operating for up to five years [1][3][4]. Failure to resolve borrower complaints within stipulated timeframes can also lead to sanctions [4].
• Registration Requirements: All digital lenders, including fintechs, loan apps, mobile money operators, telecom companies offering airtime/data credit, and other non-traditional lenders, must register with the FCCPC. Licensing fees include ₦1 million approval covering up to two loan apps per lender, with fees for applications at ₦100,000 and annual levies (e.g., ₦500,000) to maintain the license [1][3]. Licenses expire after three years and require renewal every 36 months [3].
• Consumer Protection Measures: Lenders must fully disclose all loan terms before any transaction, including interest rates, repayment conditions, and all applicable charges, in language simple enough for the average borrower to understand [2][4]. They must conduct proper creditworthiness assessments to ensure borrowers can repay loans and avoid issuing unsolicited marketing offers [3][4]. Complaints must be resolved by lenders within 24 hours for basic issues and 48 hours for complex ones, or escalated to FCCPC [4]. Additionally, lenders are required to comply with data protection laws and hand over relevant data within 48 hours if requested by authorities [1]. The regulations also prohibit exploitative interest rates and aggressive loan recovery tactics [1][3][4].
• Scope: The regulations cover a broad range of credit products, including cash loans, airtime, mobile data advances, cashback, barter transactions with verifiable monetary value, and credit extended via various platforms, including foreign-based apps targeting Nigerians [2][3].
• Additional Measures: Ownership caps are introduced to prevent excessive concentration in the digital lending market, enhancing competition. Loan repayment data must be shared with credit bureaus to improve credit scoring for consumers, supporting greater credit inclusion [1][5].

Compliance Timeline

Entities already operating in the sector have 90 days to comply with the new regulations [2]. Microfinance banks are exempt, but they must seek a waiver [2].

Implications

The new regulations require fair treatment of customers and apply to all business entities that provide lending services, including those operating across state borders. The regulations require digital lenders to renew their approvals every 3 years and pay an annual levy of ₦500,000 or a fee set by the commission [1][2][3]. Lenders must undergo audits, submit biannual reports to the FCCPC, file annual returns, and produce records within 48 hours of request [1][2].

These comprehensive regulations mark a significant effort to formalize and protect the digital lending space in Nigeria while encouraging responsible lending practices and safeguarding consumer rights [1][2][3][4][5].

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