Nigerian residents accessing loans through digital lending platforms are set to receive stronger legal protection under new regulations introduced by the country’s consumer protection agency.
Consumer credit remains a significant opportunity for financial institutions in Nigeria, where access to credit is still out of reach for many. However, the absence of state-backed loan recovery systems has left many lenders hesitant to enter the space. In contrast, digital lending platforms have taken the risk, providing unsecured loans to millions of Nigerians.
While their efforts to serve an underserved population are notable, some have resorted to aggressive and controversial tactics to recover outstanding debts. In recent years, the Federal Competition and Consumer Protection Commission (FCCPC) has stepped up activities geared at protecting lenders.
According to the Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations, 2025, digital lenders are now required to disclose the terms of any loan agreement to consumers before the transaction is completed.
Beyond that, loan agreements must be communicated in a manner that ensures the average consumer is fully aware of the terms. The FCCPC’s new regulations mandate digital lenders to leverage all platforms available to them, including their websites, to inform users of information such as lending rates and terms and conditions.
Lenders that violate the new regulations risk substantial penalties. Individuals may face fines of up to ₦50 million, while companies could be fined up to ₦100 million or 1% of their annual turnover, whichever is higher. The sanctions also extend to company leadership, with directors potentially barred from holding directorial positions for up to five years.
The new regulations also seek to improve the resolution of customer complaints. Digital lenders must now resolve customer complaints within 24 hours, while complex complaints can take up to 48 hours. Meanwhile, customers can now escalate complaints to the FCCPC, a move that will force digital lenders to improve their investments in customer service.
While the new rules are geared toward protecting consumers, they require lenders to carry out adequate credit assessments to ensure that borrowers are capable of repaying loans sustainably. In extreme cases, the FCCPC may revoke a lender’s licence, suspend its operations, or delist it entirely.
Sanitising Nigeria’s consumer lending space
While the new rules seem to encroach on areas traditionally overseen by the Central Bank of Nigeria (CBN) and the National Information Technology Development Agency (NITDA), Adedeji Olowe, CEO of Lendsqr, argues that the FCCPC’s regulations are simply reinforcing existing directives from other regulators and could play a pivotal role in shaping the future of digital consumer lending in Nigeria.
The regulations are broad in scope, targeting any form of unsecured consumer lending delivered through non-traditional channels. According to the policy document, this includes airtime, cash, data, cashback, services, and barter, so long as there is a specific or verifiable monetary value attached. As a result, telecommunications companies fall squarely within the purview of the rules.
Notably, the guidelines go a step further by setting terms of engagement for telcos. Providers can no longer offer airtime or data lending services through a single partner. They are now required to work with at least two partners, one of which must be a wholly locally owned company. The measure is expected to introduce competition and encourage more equitable service delivery in the airtime and data lending space.
Limiting invasive data use and its implications
One of the more consequential elements of the new regulations is the explicit prohibition on lenders accessing borrowers’ contact lists, call logs, and photos, data points that many digital lenders have historically relied on for credit scoring.
While this approach helped fintechs extend credit to customers with little or no credit history, it has also been a source of controversy, with some lenders using it to harass or shame defaulters during collections.
By cutting off access to this sensitive personal data, the regulation narrows the tools available for assessing creditworthiness, potentially raising barriers for lenders.
However, Olowe sees a silver lining, as the shift could finally elevate the role of credit bureaus in Nigeria’s lending ecosystem. With less reliance on invasive data harvesting, lenders may now be more inclined to report defaulters through formal credit channels.
This shift could help create a more structured and transparent lending system and deter serial defaulters by reinforcing long-term credit consequences.
Challenges around interest rate monitoring
A potentially contentious aspect of the regulation is the Commission’s plan to monitor interest rates to ensure they are not exploitative. While the intention is to protect consumers from predatory lending, the move raises questions about its practicality and how it will be enforced.
“Who determines a decent interest rate?” Olowe asks. “Interest rates today are a function of market risk, credit risk, and cost of funds. If the FCCPC is not the one giving money to them, what can they say?”
He warns that without a clear framework or coordination with monetary authorities, such intervention could have unintended consequences.
Since interest rates are largely influenced by the prevailing monetary policy rate, any attempt to impose caps or controls without market-aligned guidance could reduce lenders’ willingness to take on risk and ultimately limit access to credit for the very consumers the FCCPC aims to protect.
