Federal Government has introduced new restrictions for digital loan apps on its Play Store platform to protect users from predatory lending practices.
The new policy, effective May 31, prohibits loan apps from accessing sensitive personal data. Google instructions came just three days after the federal government licensed Fairmoney, Payday, and 117 other digital loan apps.
This policy is in line with the government’s recent efforts to prevent loan apps from invading customers’ privacy.
The Federal Competition and Consumer Protection Commission had recently registered 170 loan apps out of the 200 operating in Nigeria.
Google, in its April 2023 policy updates, stated that the new policy would provide respite for loan app users in Nigeria and other places where crude loan retrieval methods have become commonplace.
In a statement released Google explained that the new policy is aimed at addressing issues of misuse of personal data by some loan apps
It reads:
“Apps that provide personal loans, or have the primary purpose of facilitating access to personal loans (i.e, lead generators or faciliatators), are prohibited from accessing sensitive data such as photos and contacts
“This policy applies to apps which offer loans directly, lead generators, and those who connect consumers with third-part lendersâ€
The updated policy prohibits personal loan apps from accessing user contacts or photos. The policy also introduces additional requirements for personal loan apps targeting users in Pakistan, including the submission of country-specific licensing documentation to prove their ability to provide or facilitate personal loans.
The new policy follows Google’s recent announcement of updates to its Developer Programme Policy. This update mandates digital money lenders in Nigeria, India, Indonesia, the Philippines, and Kenya to conform to regulatory rules or face removal from the Play Store by January 31.
Digital money lenders in Nigeria must adhere to and complete the Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending, 2022, and obtain a verifiable approval letter from the Federal Competition and Consumer Protection Commission to be allowed on the Play Store in Nigeria.
Google also set specific instructions for loan apps operating in Nigeria asking all in its Play Store to ensure they meet regulatory requirements.
The message reads:
“To operate as a Personal Loan App in Nigeria, it is mandatory for Digital Money Lenders (DML) to comply with the limited interim Regulatory/Registration Framework and Guidelines for Digital Lending, 2022 (as may be amended from time to time) set by the Federal Competition and Consumer Protection Commission (FCCPC) of Nigeria.â€
“DMLs must also furnish verifiable approval letters obtained from the FCCPC. Loan Aggregators, on the other hand, are required to provide certification and documentation for their digital lending services, as well as contact information for every partnered DML.
"Additionally, upon request by Google Play, you must submit any supplementary information or documents to demonstrate your compliance with the regulatory and licensing requirements that are applicable to your operations.â€
The Chief Executive Officer of the FCCPC, Babatunde Irukera, commended Google’s institutionalization of the regulatory policy, stating that it was a welcome development and consistent with the commission’s position as a regulator.
The FCCPC’s Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending 2022 seeks to regulate the digital lending space and make registration and approval a prerequisite for companies seeking to operate in the space.