1. Introduction
Nigeria’s digital lending sector has experienced explosive growth in recent years, offering millions of citizens rapid access to credit through mobile applications and online platforms. However, this expansion has also given rise to widespread consumer complaints, ranging from exploitative interest rates to invasive debt recovery tactics. In response to mounting concerns over harassment, privacy violations, and unethical practices, the Federal Competition and Consumer Protection Commission (“FCCPC” or “the Commission”) has enacted the Digital, Electronic, Online or Non-Traditional Consumer Lending Regulations (“DEON Regulation 2025” or “the Regulations”).
2. Background and Regulatory Context
The introduction of the Regulation marks a pivotal moment in Nigeria’s financial regulatory landscape. Effective from 21st July, 2025 and issued under the authority of the Federal Competition and Consumer Protection Act 2018 (“FCCPA 2018”) , the Regulation aims to restore order and integrity to Nigeria’s fast-growing credit market. The framework introduces robust safeguards to ensure transparency, fairness, responsible conduct, and data protection in digital lending operations. According to FCCPC Chief Executive Officer, Mr. Tunji Bello, the new rules send a clear message: “innovation in financial services must not come at the expense of consumer dignity or the rule of law”.
The need for regulatory intervention became increasingly urgent as digital lending platforms proliferated, offering quick and convenient access to credit but often operating outside the bounds of ethical and legal standards. Borrowers reported widespread abuses, including harassment by loan recovery agents, unauthorized access to personal data, and defamatory messages sent to third parties such as family members, employers, and social contacts. In some cases, defaulting borrowers were publicly labeled as criminals or falsely declared deceased, tactics that rights groups have condemned as both defamatory and psychologically abusive.
This Regulation seeks to balance the benefits of financial inclusion with the need to eliminate exploitative conduct in the digital credit space.
3. Key Provisions of the DEON Regulations 2025
Some of the core components of the DEON Regulation 2025 include:
a. Mandatory registration of all digital lenders with the FCCPC within ninety (90) days: The new regulations make it compulsory for all digital lending platforms and their associated service providers to formally register with the FCCPC. The application process requires the submission of key documents, including a compliance audit report and a Data Protection Impact Assessment (DPIA) report. Applicants are required to pay two separate fees which includes a non-refundable registration fee and an approval fee of up to ₦1,000,000 (One Million Naira) upon successful application. This base fee covers the registration of two software applications (e.g., two loan apps). For each additional app beyond the first two, a fee of ₦500,000 (Five Hundred Thousand Naira”) per application is required, with a maximum cap of five total applications per company. The initial approval is valid for one year. Thereafter, the license must be renewed by the operator every thirty-six (36) months, three years(3) upon payment of a renewal fee.
b. Approval for Partnerships: Lenders must seek and obtain written approval from the FCCPC before finalizing any new partnership agreement related to their lending operations. Both new and existing vendor contracts are further required to be submitted to the FCCPC for review and approval, and any subsequent changes to already-approved partnerships must also be submitted for approval by the commission.
c. Annual and Bi-Annual Compliance Report Filing Obligations: To ensure compliance with regulations, digital lenders and their key third-party vendors are now mandated to submit regular compliance reports to the FCCPC. A continuous requirement that includes bi-annual reports which are filed every six months and annual returns filed with the Corporate Affairs Commission (“CAC”). The implication of this is that it creates a system of constant oversight, moving beyond a one-time registration to active, ongoing monitoring of business practices.
d. Broad Applicability: The Regulations offer an extensive applicability to any form of lending that occurs online, digitally, or through innovative channels. Whether the loan is secured or unsecured. Essentially, the rules apply regardless of where the company is based, provided they are operating in the Nigerian market. The regulations are triggered if the lender receives any form of benefit (cash or otherwise) from the lending activity. This broad definition specifically includes telecom companies offering airtime credit, Mobile Money Operators (“MMOs”), agritech platforms providing input loans, barter systems where goods or services are lent.
e. Exemption for Licensed Microfinance Banks (MFBs) and Interstate Lending Requirement: The Regulation creates a tiered system. While licensed Microfinance Banks (MFBs) are exempted from the full registration process under the Regulation, they are not exempt from compliance. They must obtain a formal waiver from the FCCPC, confirming their existing license, and acknowledging that they must abide by the rules on pricing, conduct, and data protection. Furthermore, the scope of the Regulations is specifically targeted at larger, scalable operations; the Regulation indicates that a lender must only comply if it operates interstate (in more than one state in Nigeria), suggesting that very small, hyper-local digital lenders may fall outside this regulatory framework. By exempting already-licensed MFBs (subject to a waiver), the FCCPC avoids duplicative oversight and leverages the existing prudential regulation of the Central Bank of Nigeria (“CBN”), focusing its resources on the less-regulated, often higher-risk fintech lenders. Simultaneously, the interstate threshold smartly focuses regulatory supervision on digital lenders with a broader, scalable consumer reach, which pose a greater systemic risk to consumer protection, while potentially reducing the compliance burden on very small, localized operations.
g. Penalties for Non-Compliance: Non-compliance with the provisions of the Regulations attracts severe penalties. Corporations may be fined up to ₦100,000,000 (One Hundred Million Naira) or 1% of their turnover from the preceding financial year, whichever is higher. Individuals (such as director, manager or other employee) may face penal fines up to ₦50,000,000 (Fifty Million Naira), and company directors may be disqualified for up to five years. Additional sanctions include suspension, delisting, or revocation of approval.
h. Interest rate Monitoring: Lenders are now subject to regular monitoring by the Commission who shall periodically monitor interest rates for services of consumer lending, and ensure rates are not exploitative and inimical to consumer interest.
4. Compliance Strategies for Digital Lenders
The Regulations mark a major shift toward a more transparent and consumer-focused financial system in Nigeria. Digital lenders are now required to uphold strict standards of ethical conduct, operational integrity, and regulatory compliance. This includes clearly presenting all loan terms, such as interest rates, fees, and repayment schedules, without hidden conditions or exploitative clauses. Credit must only be issued after a borrower has actively requested it, as automatic or pre-approved lending is now prohibited. Lenders must also resolve complaints swiftly, within twenty four (24) to forty eight (48) hours, and maintain accessible channels for dispute resolution. Accurate record-keeping is essential to meet filing obligations, and partnering with legal experts is strongly advised to ensure full compliance and smooth navigation of the FCCPC’s licensing process.
5. Operational Realities of Enforcing the Regulation
The enforcement of the Regulation introduces a complex mix of challenges and opportunities for digital lenders in Nigeria’s credit market. On one hand, the regulatory framework demands significant operational restructuring, including updates to internal systems, customer interfaces, and data management protocols. Profitability concerns also loom, as stricter controls on interest rates and fee disclosures may reduce margins, particularly for lenders dependent on high-risk, short-term models. The risk of non-compliance carries serious consequences ranging from financial penalties to reputational damage, requiring constant vigilance. Moreover, rising consumer expectations for ethical treatment and accountability may lead to increased scrutiny and dispute resolution cases.
Yet, these challenges are matched by transformative opportunities. Lenders that align with the Regulation can position themselves as ethical, transparent, and consumer-focused, gaining a competitive edge in a more regulated environment. The departure of non-compliant players is likely to foster a more stable and professionalized market, creating space for reputable institutions to grow and collaborate.
6. Conclusion
The Regulation marks a pivotal shift in Nigeria’s digital lending landscape, establishing firm standards for licensing, transparency, data protection, and ethical recovery practices. Beyond mere compliance, digital lenders are now called to embrace responsible innovation and build lasting consumer trust. Though the transition poses operational challenges, it also presents a powerful opportunity to reshape industry norms and advance a more inclusive, accountable financial ecosystem.
Noble Obasi is a Team Lead at Stren & Blan Partners and supervises the Firm’s Capital Markets, Mergers and Acquisition and Private Equity Practice Group. Ebube Okorji and Onyinye Isikaku are both Trainee Associates in the Firm’s Capital Markets, Mergers and Acquisition and Private Equity Practice Group.
Stren & Blan Partners is a full-service commercial Law Firm that provides legal services to diverse local and international Clientele. The Business Counsel is a weekly column by Stren & Blan Partners that provides thought leadership insight on business and legal matters.
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