Validation of Loan Apps with the FCCPC in Nigeria

In Nigeria, money lending has evolved from the traditional banking system to a more flexible and technology-driven system. Money lending business in Nigeria is now characterized by loan apps. For effectiveness, there are several regulatory and compliance considerations which have become relevant in operating money lending business in Nigeria.

To operate a money lending business in Nigeria, a permit must be obtained from the Ministry of Home Affairs in the state where the lender intends to carry out business. The holder of the permit can only operate in the state where it was issued. This license is required to be renewed yearly.

Entities that intend to carry out the business of digital lending must register with the Federal Competition and Consumer Protection Commission (FCCPC). Where an entity commences business without registration, it runs the risk of being banned form operating as a money lender and having its lending application being banned from the relevant digital distribution service hosting the mobile lending applications.

Certain money lending entities are exempt from obtaining money lenders license and registration with FCCPC. These include deposit money banks, microfinance banks and finance companies which obtain their operating license from the Central Bank of Nigeria (CBN). These entities must however apply for exemption from FCCPC on the basis that they are regulated by the CBN.

Requirements for Validation with FCCPC

As a digital money lender, an application for registration with FCCPC must be addressed to the Commission and must be accompanied by the following:

• Certificate of Incorporation
• A brief description of the business of the Applicant
• Organogram showing role players and any operational approving authorities/person
• Name and address of a person within the business who is authorized to accept all correspondence on behalf of the business
• Evidence of feedback, and complaint resolution mechanism
• Evidence of tax payment and where applicable, tax waivers
• FCCPC Digital Lending Guidelines Form 002 – Declaration for Digital Lending Businesses in Nigeria.

If the application is approved, the FCCPC will issue an Approval letter which will serve as proof that the Digital lending company has met the registration requirements imposed on digital lenders.

Failure to register a digital lending app with the FCCPC will be followed by restrictions on the lending app on digital distribution platforms and fintech companies. These restrictions will only be eased once the appropriate regulatory requirements have been complied with.

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