Proposed Bill for Fintech Regulatory Authority Divides Industry Players

A legislative proposal aimed at establishing a regulatory commission for the fintech sector is causing divisions among industry stakeholders. Fintech operators have expressed concerns about potential overlaps with existing regulations, while telecommunications and agent groups are advocating for a unified authority to manage oversight in the sector.

This discussion came to light during a public hearing held on Monday by the House of Representatives’ joint committees on digital and electronic banking, banking regulations, science and technology, communications, and capital market and institutions.

Supporting the bill, the Association of Telecommunications, Information, Technology, Cable Satellite Network Operators and Allied Services Employers of Nigeria (ATICEN) claims that the lack of a dedicated fintech regulator has resulted in fragmented oversight.

Adede Williams, the president of ATICEN, highlighted that nearly 400 fintech companies are currently operating in Nigeria without a central regulatory authority focusing on their activities. He noted that overlapping mandates between various regulatory bodies have led to policy inconsistencies and regulatory voids.

"The absence of an independent regulatory body is a serious risk to consumers, investors, service providers, stakeholders, and the broader stability of the digital economy," Williams declared.

He further argued that a singular regulatory commission could streamline responsibilities, diminish confusion, and foster the clarity necessary for innovation and sustainable investment in the sector.

In support of the proposal, Obioha Otti, the acting president of the Association of Mobile Money and Bank Agents in Nigeria (AMBAN), emphasized the importance of integrating registered point-of-sale agents into the new regulatory framework. Otti represents over two million agents across Nigeria and asserts that they play a crucial role in promoting financial inclusion, especially in underserved areas.

He stressed that as the regulatory body is being formed, it should formally include registered POS agents, adapting regulations to suit the rapidly changing fintech landscape.

Contrarily, fintech operators and digital lenders raised alarms that this new commission might overlap with the functions of the Central Bank of Nigeria (CBN) and other established agencies. Maxwell Loko, the vice-president for public and government affairs at OPay Digital Services, stated that while they endorse greater regulation, effective oversight hinges on clarity and coordination rather than the addition of more regulatory bodies.

Loko pointed out that the CBN already governs mobile money operators, payment service providers, and digital banks, while the Nigeria Data Protection Commission (NDPC) manages data governance and the Federal Competition and Consumer Protection Commission (FCCPC) takes care of consumer protection.

"Without distinctly defined roles, instituting a parallel regulator could duplicate licensing processes, create overlapping supervisory reviews, increase compliance expenses, and generate regulatory ambiguity that could deter investment," Loko cautioned.

He recommended reinforcing the existing regulatory framework overseen by the CBN and fostering structured inter-agency coordination, arguing that a singular regulator model anchored by the CBN would ensure accountability and minimize duplication in line with international standards.

Similarly, Henry Obiekea, managing director of FairMoney Microfinance Bank, expressed concerns that the bill could result in dual oversight for digital lenders, with the CBN overseeing prudential matters while the proposed commission would manage consumer interactions.

This dual oversight could complicate compliance, particularly for technology- based services such as digital loan applications and know-your-customer protocols, Obiekea explained. Despite these potential setbacks, he acknowledged the bill as a dual-edged sword that could provide formal recognition to digital finance as a distinct sector, bolstering investor confidence and enhancing consumer trust if structured appropriately.

The bill's proponent, Fuad Laguda, emphasized that Nigeria lacks a sole authority for regulating fintech operators and service providers, despite their considerable contribution to national development. He contended that the establishment of a fintech regulatory commission would bolster user protection, enhance sector profitability, and offer a clearer framework for supervisory oversight.

As opinions remain sharply divided among stakeholders, lawmakers are now faced with the challenge of reconciling the need for coherent regulation with concerns about regulatory overlap in one of Nigeria's most rapidly evolving sectors.