Nigeria’s Digital Lending Revolution: FCCPC’s New Rules, Big Fines, Unsettled Waters and Uncharted Territory
Nigeria’s digital lending landscape is undergoing a seismic shift. The Federal Competition and Consumer Protection Commission (FCCPC) has unveiled its Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations, 2025, moving from interim guidelines to a comprehensive, strictly enforced framework. This overview combines the full text of these regulations with recent news, providing a complete picture of what this means for lenders, consumers, and the future of digital finance in Nigeria.
The FCCPC’s New Rulebook: Decoding the New 2025 Lending Regulations
The Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations, 2025 (the “Regulations”) mark a definitive pivot in how Nigeria regulates its digital lending space. Published on July 24, 2025, these rules are made pursuant to the Federal Competition & Consumer Protection Act (2018) and are effective from their commencement date.
The Regulations apply widely, covering:
All Unsecured Loans: This includes cash loans, airtime advances, data loans, cashback, services, and barter arrangements with verifiable monetary value, delivered digitally, electronically, online, or through non-traditional means.
The Entire Lending Value Chain: It extends beyond primary lenders to vendors, service providers, and partners/collaborators who receive benefits or a portion of revenue from the transactions.
Cross-State Operations: The rules cover any business or operation that extends beyond a single state.
No Substitutions: Compliance with these Regulations does not preclude compliance with other existing laws or sector-specific regulations (e.g., for microfinance banks).
The FCCPC’s core objectives for these Regulations are clear:
Consumer Protection: To safeguard consumer interests, eliminate exploitative practices, and ensure fair redress.
Competitive Market: To promote fair competition and ensure consumers have access to quality products at competitive prices.
Ethical Conduct: To ensure service providers comply with local and international standards for safe and ethical service delivery.
Gatekeeping the Market: Registration, Fees, Approvals, and Renewals
Mandatory Registration: Every undertaking involved in consumer lending services must apply for and receive FCCPC approval to continue operations. Existing operators have 90 days from commencement to comply.
Partnership Approvals: Any partnership for providing consumer lending services must be explicitly approved by the FCCPC, with the Consumer Lending Services Agreement forming part of the application.
Application & Approval Fees: A non-refundable application fee of ₦100,000 is required. Approval fees vary: ₦1,000,000 for Mobile Money Operators (MMOs) offering airtime/data advances and ₦1,000,000 for Digital Money Lenders (DMLs). Additional apps beyond the initial two incur ₦500,000 per app, with a maximum of five apps allowed.
Expiration and Renewal: Approvals expire on December 31st of the third calendar year from issuance and must be renewed every 36 months, subject to a ₦500,000 annual levy. Expect a minimum 30-day review period for FCCPC approval of partnerships and registrations, with potential extensions.
CAC Registration: Nigerian-domiciled undertakings or entities must also be duly registered with the Corporate Affairs Commission (CAC).
Consumer Protection Rules
The Regulations introduce stringent consumer protection measures:
Disclosure and Transparency: Lenders must fully disclose interest rates, repayment terms, and all associated fees in clear, legible, and simple English before any transaction is completed. Advertisements must be factual and unambiguous.
Fair Treatment: Consumers must be treated equitably, without discrimination or exploitation. Unilateral changes to contract terms (including interest rates) are only allowed if expressly provided for in the agreement.
Responsible Business Conduct: Lenders must conduct business ethically, avoid incessant or excessively targeted advertising, and only provide credit advances on an “opt-in” basis, strictly prohibiting automatic or pre-authorised lending.
Credit Assessment: Before granting credit, lenders must profile and assess the consumer’s capability to repay sustainably.
Data Protection and Privacy: Strict compliance with the Nigeria Data Protection Act 2023 is mandatory, with explicit limits on accessing customer call logs, contacts, and photos/galleries. Lenders must confirm their apps will not have such access.
Complaint Handling: Lenders must have documented, fair, transparent, and responsive complaint handling mechanisms, with complaints addressed and resolved within 24-48 hours.
Interest Rate Monitoring: Crucially, the FCCPC “shall periodically monitor interest rates for services of consumer lending and ensure rates are not exploitative and inimical to consumer interest.”
Reporting Requirements: Lenders must maintain accurate records and submit biannual and annual reports to the FCCPC.
Heavy Penalties for Non-Compliance
The Regulations introduce a defined penalty structure:
Fines: Individuals can face an administrative penalty of up to ₦50,000,000. Companies face a penalty of up to ₦100,000,000 or 1% of their previous year’s turnover, whichever is higher.
Director Liability: Directors of offending firms can be proceeded against, with sanctions including disqualification as a director for up to five years.
Operational Sanctions: Penalties may also include suspension of operations, delisting of registration, or revocation of approval.
Termination of Agreements: Consumer Lending Services Agreements can be immediately terminated if any party violates the Regulations or engages in conduct against consumer interests.
Unsettling the Waters: Digital Lenders React to Rate Monitoring
The news article, “FCCPC’s new rule on loan app interest rates unsettles Nigeria’s digital lenders,” highlights the immediate impact and industry’s concerns, particularly regarding the FCCPC’s new power to monitor interest rates.
Lenders’ Alarm: Digital lenders are “worried” by the FCCPC’s intent to monitor and ensure rates are “not exploitative”. The President of the Money Lenders Association (MLA), Mr Gbemi Adelekan, states that interest rates are determined by “credit risk, market risk, and cost of funds,” warning this regulation could “disrupt the flow of the highly risky digital lending market.”
Borrowers’ Burden: The article highlights extreme cases, such as a customer being offered a ₦2.5 million loan with repayments totalling ₦6.4 million over 24 months, an approximate 198% annual interest. These high rates have driven widespread complaints and, in some cases, non-repayment.
Lenders’ Justification: Lenders argue that high rates reflect the cost of funds (as most do not take deposits and borrow from banks) and the high risk associated with lending to “bottom of the pyramid” customers who often lack steady income.
Despite concerns over interest rates, lenders welcome other aspects of the regulations, such as:
Data Privacy Wins: Adelekan commended the prohibition of apps accessing contact lists, pictures, and transactions, calling it “a good step in the right direction for the ecosystem” that will force lenders to utilise credit bureaus.
Transparency Mandate: The requirement for lenders to clearly state loan conditions (tenor, interest rates, repayment plans) is supported.
End of Experimentation: It is noted that the new rules signal that FCCPC is “no longer experimenting with digital lending regulation,” asserting that “digital lending isn’t a side hustle anymore. It’s part of the financial system, and it’s going to be treated that way.”
Structured Compliance: The regulations replace ad hoc enforcement (like app delistings) with a clear, defined penalty structure, reflecting a shift to structured compliance akin to markets like Kenya.
Broader Coverage: Telcos offering airtime credit services are now explicitly included, although microfinance banks with waivers are exempt.
KEY TAKEAWAYS FOR ALL STAKEHOLDERS
Compliance is Non-Negotiable: For all digital lenders, service providers, and partners, alignment with these Regulations is mandatory and immediate. Ignoring them risks severe financial penalties, operational shutdowns, and reputational damage.
Interest Rates Under Scrutiny: The FCCPC’s monitoring of interest rates is a game-changer. Lenders must re-evaluate their pricing models to balance profitability with regulatory demands for “non-exploitative” rates.
Enhanced Consumer Rights: Data privacy, transparent disclosures, fair treatment, and robust complaint mechanisms are now legal obligations, significantly empowering consumers.
Transparency and Fair Treatment: Clear disclosure of terms and fair handling of complaints are now legal mandates, demanding robust internal processes from lenders.
Formalisation and Trust: While compliance costs may impact smaller operators and potentially lead to higher borrowing costs for consumers, the framework aims to formalise the sector, address harassment, opaque fees, and predatory rates, and ultimately restore trust in digital lending.
Continuous Monitoring: The FCCPC’s active role in monitoring rates and advertising will continually influence how products are marketed and priced.
Potential Overreach: The article raises concerns about the FCCPC acting as a licensing authority, traditionally outside its scope, and the potential for “disproportionate costs” on non-financial companies offering incidental credit. The overlap with Data Protection Commission requirements also raises jurisdictional questions.
Nigeria’s digital lending landscape is at a critical juncture. These new Regulations are a powerful statement by the FCCPC, asserting consumer protection and fair competition as paramount. While they present significant challenges for lenders, especially regarding interest rate determination, they also offer a path toward a more transparent, ethical, and sustainable industry. Both lenders and consumers must fully understand these rules to navigate this evolving financial frontier successfully. This new framework is poised to reshape Nigeria’s digital lending sector, bringing greater accountability and protection, albeit with significant adjustments required from all players.
