The House of Representatives yesterday directed its Committee on Banking and Currency, Financial Crimes, and Telecommunications to investigate and report on suspected sharp practices and abuses by Nigerian fintech and loan shark organizations within four weeks.
The resolutions came after the approval of a motion in plenary yesterday on the “urgent need to probe harsh practices by unregulated online Fintech lending organizations and abuse of mobile digital loan apps in Nigeria,” sponsored by Hon. Alhaji Satomi.
Satomi cited the spread of online borrowing apps across Nigeria by those he described as fraudulent and unethical profiteers. He claimed that they coerce many low-income Nigerians to borrow and become entangled in a network of sham loan apps maintained on the Google Play Store by individuals and businesses looking to defraud low-income earners.
According to him, the COVID-19 epidemic, which affected several economies including Nigeria, resulted in job losses owing to lockdowns, movement restrictions, and face-to-face encounters. This, he claims, has accelerated the speed of financial service digitalization and the entry of some unethical unregulated financial service firms.
The congressman emphasized that predatory lending applications masquerade as platforms where naïve members of the public are promised speedy loans with no collateral other than the giving of a bank verification number (BVN).
According to him, the majority of loan apps, firms, and individuals operate with no government regulation, expired licenses, or none at all.
He expressed concern that searches for the registration status of loan apps in Nigeria from the Corporate Affairs Commission (CAC) revealed that the founding directors of such apps or companies were foreign nationals who lacked the necessary licenses to conduct the volume of financial transactions and were operating illegally in the country.
Furthermore, he stated that many of such online loan apps operating in Nigeria disbursed loans to customers with no collateral and defaulters were 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).