FairMoney, Palmpay, Other Lenders Risk ₦100m Fine Over Unfair Interest Rates

Borrowers in Nigeria may soon get relief from the suffocating interest rates of loan apps, as the Federal Competition and Consumer Protection Commission (FCCPC) has announced fresh regulations to monitor and control digital lenders.

The new rules, captured under the Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations, 2025, empower the Commission to periodically review interest rates and ensure they are not exploitative.

For years, Nigerians have raised alarms about the crippling charges imposed by loan apps. Many borrowers still go ahead to take the loans due to urgent needs but end up defaulting, citing impossibly high repayment demands.

In one case, a customer who borrowed ₦2.5 million was asked to repay ₦268,230 monthly for 24 months—a total of ₦6.4 million, with ₦3.9 million as interest, equivalent to nearly 198% annual interest rate.

While this development excites borrowers, digital lenders are expressing concerns. The President of the Money Lenders Association (MLA), Mr. Gbemi Adelekan, told Nairametrics that pegging interest rates could disrupt the digital lending ecosystem.

“For us, interest rates are tied to credit risk, market risks, and cost of funds. Unless authorities are ready to provide us cheaper funds, I don’t know how this will work,” he argued.

Still, Adelekan praised parts of the regulation that stop lenders from accessing borrowers’ contact lists, pictures, and personal transactions — a practice widely condemned as harassment.

Industry experts also see the regulation as a turning point. Founder of Lendsqr, Adedeji Olowe, said:

“Whether you love it or hate it, digital lending isn’t a side hustle anymore. It’s part of the financial system, and it’s going to be treated that way.”

The new regulation also spells out tough sanctions for violators: ₦50 million fines for individuals, ₦100 million (or 1% turnover) for companies, and possible delisting from app stores.

With over 425 registered digital lenders in Nigeria as of May 2025, the FCCPC appears determined to protect consumers from predatory practices, while lenders insist that risk realities must also be considered.