House of Representatives, Thursday, mandated its Committee on Banking and Currency, Financial Crimes and Telecommunications to investigate the alleged sharp practices and abuses by Fintech and online mobile digital loan apps and companies in Nigeria.
The resolution followed the consideration of a motion under matters of urgent public importance titled “Need to Investigate Sharp Practices By Unregulated Online Fintech Lending Companies and Abuse of Mobile Digital Loan Apps in Nigeria”, moved at the plenary by Hon. Ahmed Satomi from Borno State.
Presenting the motion, Satomi noted the proliferation of online loan apps across Nigeria by “some fraudulent and unscrupulous profiteers affecting many low income Nigerians, who are coerced to borrow and get trapped in the web of sham loan apps hosted on Google Play Store by individuals and companies to swindle the low-income earners”.
He said they the COVID-19 pandemic affected many economies including Nigeria as jobs were lost and incomes were affected, due to the lockdowns, restrictions on movement and face-to-face interactions sped up the pace of digitalisation of financial services and the infiltration of some unscrupulous unregulated financial service operators.
He said: “These predatory lending apps are disguised as platforms where unsuspecting members of the public are promised access quick loans with no collateral except provision of bank verification number (BVN).
“Such victims are expected to repay loans at astronomical interest rates within 3-7 days as against the 91 to 365 days claim on Google Play store which has over 83.07% market share in Nigeria.
“Most of these loan apps or companies and individuals operate with no regulation by government, expired licenses and in some cases, no licensing.”
The lawmaker expressed concern that searches for the registration status of loan apps in Nigeria from the Corporate Affairs Commission (CAC) shows that founding directors of such apps or companies were foreign nationals without the required license to operate the volume of financial transactions and illegally operating in the country.
“The operations of Kash Kash with a hosted operating account under the name Super Car Universal Limited with a certain commercial bank in Nigeria where Kash Kash, carries out activities of the loan app, such as the exorbitant interest rates they collected from customers and defamatory messages sent to contacts of their customers when they missed their repayment date.
“Such account holder did not have the required license to operate as a money lender, which led the Commercial Bank to close the first account, but such operations were moved to another account named Speedy Choice which is still operational and managed by the same people who managed the previous account.
“Many of such online loan apps operating in Nigeria disbursing loans to customers with no collateral and defaulters are always sent threatening messages and that Loan apps and other fintech products can be used for money-laundering and other forms of illicit financial flows (IFF).
“These unregulated Nigerian fintech companies shame, threaten customers for late payment of loans;
Cognizance of the need to investigate activities these fintech companies including OKash, Opay, PayLater, PalmCredit, Branch, QuickCheck, Aella Credit, FairMoney, KiaKia, EasyCredit, NewCredit, Umba, Carbon, FirstNell, SoftNaira, SharpCash, Newcredit, Cash Mall, NairaLand, Naira9ja, New Credit Loan App, Future Cash, SharpCredit, MoneyHub, 9jaCash, Henloan, Get Loan, Plenty Cash, Fundy, iMoneyPlus, CashCredit, LifeLine, Lumos Loan, NairaPlus, Care Finance, Cashbean, CashMe, LoanMe, LifePurse iLoanPro, LairaPlus, OxLoan and NoNowMoney etc”.
Adopting the motion, the House gave the committee 4 weeks within which to conclude the assignment and report back to the House for further legislative action.