Court Halts Enforcement of Consumer Lending Regulations in Nigeria
A Federal High Court in Lagos has temporarily restrained the Federal Competition and Consumer Protection Commission (FCCPC) from enforcing critical provisions of the Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations of 2025. This decision, made on Wednesday, follows an ex-parte application from the Wireless Application and Service Providers Association of Nigeria (WASPA Nigeria).
Introduced in 2025, the regulation aimed to mitigate predatory lending practices and foster stability within Nigeria’s burgeoning fintech sector. It requires all digital lenders to acquire formal licenses, comply with strict interest rate limits, and follow transparent disclosure requirements for loan terms.
The regulation also imposes stringent data privacy protections, aiming to shield consumers from harassment and the unauthorized use of their data. Additionally, it prohibits unethical debt collection practices commonly exploited by loan sharks.
The FCCPC’s introduction of these regulations is a direct response to a surge in predatory behavior among digital lenders in Nigeria. This includes unethical methods for stealing debtor data and utilizing that information for blackmail and harassment. Despite these intentions, WASPA Nigeria has contested both the regulation and the FCCPC’s authority to enforce it, prompting legal action.
In its legal challenge, WASPA Nigeria highlighted the adverse impact on its members, many of whom operate in the digital lending and mobile services sectors. An affidavit from Ayo Staffman, director of the association’s Registered Financial Member, claims that the FCCPC lacks the legal authority to regulate aspects of telecommunications affected by the new rules. The association argues that regulatory powers over this sector fall under the Nigerian Communications Commission (NCC), as specified in the Nigerian Communications Act of 2003, thereby creating a conflicting regulatory framework.
WASPA Nigeria further alleged that the FCCPC acted prematurely by initiating enforcement steps before the stipulated compliance deadlines. According to the affidavit, the commission issued a directive on April 10, requiring members to provide written assurances of compliance and cease any operations that might violate the new regulations, with a compliance deadline set for April 16. Non-adherence to these guidelines may lead to sanctions, fines, or penalties.
WASPA expressed concerns that the implementation of these regulations could significantly disrupt its members’ operations while exposing them to regulatory uncertainties. The association also warned that ongoing enforcement could undermine substantive litigation unless the courts intervened.
Court Decision Restricts FCCPC’s Actions
In his ruling, Justice Luis Alagoa granted the request for a temporary restraining order, preventing the FCCPC from enforcing the contested provisions of the Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations. Specific provisions cited in the lawsuit include Sections 3, 7, 10, 12, 13, 14, 15, 16, 24, 27, 29, and 32. The court’s decision also restricts the FCCPC from taking any actions that may obstruct WASPA Nigeria’s ability to continue providing regulated services.
Moreover, the court prohibited the FCCPC from imposing fines or sanctions on WASPA members for failing to comply with the contested regulations. The ruling effectively suspends any enforcement actions or directives related to the regulations until the dispute is resolved in court.
Background on Regulatory Intentions
The FCCPC initiated enforcement of these regulations in September 2025, responding to a wave of consumer complaints highlighting predatory practices, data privacy breaches, and fraudulent collection tactics by some digital lenders. Ondaje Ijagwu, Corporate Affairs Director for the Commission, stated that the regulations were developed under sections 17, 18, and 163 of the Federal Competition and Consumer Protection Act of 2018, emphasizing consumer protection.
The regulations, effective since July 21, 2025, empower the FCCPC to register and oversee operators in the digital lending sector. They encompass all unsecured consumer loans conducted through electronic, online, mobile, or other non-traditional channels, mandating registration, transparency, ethical debt collection, and fair lending practices.
Despite the intentions behind the regulations, some lenders argue that interest rates should be determined by market factors like the cost of funds and credit risk, rather than imposed restrictions. They caution that excessive regulation could stifle the digital lending market, ultimately hindering financial inclusion efforts.
