February 2, 2023

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Again, CBN Warns Nigerians Against Unlicensed Financial Operator

The Central Bank of Nigeria (CBN) yesterday advised members of the public to refrain from dealing with unlicenced or Illegal Financial Operators (IFOs), who lure and defraud unsuspecting members of the public by offering extra-ordinary returns on investments as bait.

Members of the public were also advised to visit the websites of the central bank, Securities and Exchange Commission (SEC) and other relevant member agencies of the apex bank’s Financial Services Regulation Coordinating Committee (FSRCC) to verify the registration and license status of such companies and schemes before investing in them.

An advisory on the illegal financial operators in Nigeria was issued by the FSRCC and posted on the CBN website.

The CBN further expressed worry over the increase in the activities of IFOs which it stated portends grave risk to public confidence and the stability of the Nigerian financial system.
The CBN urged members of the public to report any individual or entities suspected to be involved in such nefarious activities to the law enforcement agencies.

It added that financial regulatory agencies would continue to carry out all necessary due diligence before registering/licensing any operator under their regulatory purview.

The bank said agencies shall refer to relevant supervisory authorities for confirmation before finalising on any registration/licensing application.

Member agencies of FSRCC were further encouraged to engage in regular sensitisation campaigns on the threats posed by the activities of IFOs.
The CBN had severally warned Nigerians to desist from patronising loan sharks.

The CBN had in April 1994, undertook to facilitate a formal framework for the co-ordination of regulatory and supervisory activities in the Nigerian financial sector by establishing the Financial Services Coordinating Committee (FSCC) to address more effectively, through consultations and regular inter-agency meetings, issues of common concern to regulatory and supervisory bodies.

On May 27, 1994, the name of the Committee was changed to Financial Services Regulation Coordinating Committee (FSRCC).
The committee was accorded legal status by the 1998 amendment to Section 38 of the CBN Act 1991 and formally inaugurated by the Governor of the CBN in May 1999.

Similarly, in November 2021, following increasing public outcry, the Executive Vice Chairman/Chief Executive, Federal Competition and Consumer Protection Commission (FCCPC), Mr. Babatunde Irukera, had announced that the commission was partnering the CBN, the Independent Corrupt Practices Commission (ICPC), the National Information Technology Development Agency (NITDA) and the Economic and Crimes Commission (EFCC) to address multiple potentially dubious conduct of certain money lenders, otherwise known as loan sharks

A loan shark implies a money lender who charges extremely high rates of interest, typically under illegal conditions.

Irukera said the joint investigation followed continuing complaints about questionable repayment enforcement practices including public shaming and violations of privacy, arbitrary, unjust, unreasonable, or exploitative interest rates and or loan balances calculations, harassment, and failure of consumer feedback mechanisms.

He said the development had resulted in significant and understandable consumer aggravation and dissatisfaction.

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