The House of Representatives yesterday mandated its Committee on Banking and Currency, Financial Crimes and Telecommunications to investigate the alleged sharp practices and abuses by fintech and loan shark firms in Nigeria and report within four weeks.
The resolutions followed the adoption of a motion raised under matters of urgent national importance on the, “urgent need to investigate sharp practices by unregulated online Fintech lending companies and abuse of mobile digital loan apps in Nigeria ” sponsored by Hon. Alhaji Satomi at plenary yesterday.
Satomi, noted that the proliferation of online loan apps across Nigeria by those he described as fraudulent and unscrupulous profiteers. He said they coerce many low income Nigerians 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.
According to him, the COVID-19 pandemic that affected many economies including Nigeria led to job losses due to the lockdowns, restrictions on movement and face-to-face interactions. This, he said sped up the pace of digitalisation of financial services and the infiltration of some unscrupulous unregulated financial service operators.
The lawmaker stressed that the 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).
“Victims are expected to repay loans at astronomical interest rates within three to seven days as against the 91 to 365 days claim on Google Play store which has over 83.07 per cent market share in Nigeria,” he added.
According to him, most of the loan apps or companies and individuals operate with no regulation by government, expired licences and in some cases, none at all.
He raised concern that searches for the registration status of loan apps in Nigeria from the Corporate Affairs Commission (CAC) showed that founding directors of such apps or companies were foreign nationals without the required licences 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 licence 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,” he said.
Furthermore, he explained that many of such online loan apps operating in Nigeria disbursing 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).
“These unregulated Nigerian fintech companies shame, threaten customers for late payment of loans. Cognisance 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, ” the lawmakers alleged.