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Financial Services Regulation Coordinating Committee (“FSRCC”) hopes to hem in and narrow the activities of unlicenced or illegal financial operators in Nigeria.

ON 4th April, 2022, FSRCC published its public statement tagged “Advisory on Illegal Financial Operators in Nigeria ”.

Summarized Background:

  • BOFIA 2020 allows deposit money banks (DMBs) to receive deposits or cash-holding services in Nigeria while ISA 2007 okays SEC to licence any securities and investment companies in Nigeria
  • Any person or company who is not a registered cooperatives society that receives deposits or investments without CBN’s licence or SEC’s approval is an illegal or unlicensed financial operator (“IFO”)
  • FSRCC’s functions include encouraging various agencies to perform their functions in the financial services industry
  • FSRCC on 4th April, 2022, advised Nigerians to shun IFOs
  • Could FSRCC have done more than advisory?

Has IFOs been hemmed in on all sides:

FSRCC’s mere advisory document is not likely to hem in IFOs, given consumers apparent willingness or weakness in dealing with IFO that include ponzi schemes.

Members of FSRCC include the following key operators and regulators:

  • Central Bank of Nigeria (CBN)
  • Nigeria Deposit Insurance Corporation (NDIC)
  • Securities and Exchange Commission (SEC)
  • National Insurance Commission (NAICOM)
  • Corporate Affairs Commission (CAC)
  • Federal Ministry of Finance (FMF)
  • National Pension Commission (PenCom)
  • Nigerian Exchange Group (NGX)
  • Nigerian Commodity Exchange (NCX)
  • Federal Inland Revenue Service (FIRS)

Regulatory approach of labelling activities of unlicensed financial operators as illegal show how slowly governments and its agencies are slow to learn, if not, unteachable.

You will remember the days that NAFDAC labelled all unorthodox medicines as illegal or when traditional birth attendants (TBA) were proscribed practices. – Pointless blaming our (dear) colonial masters.

Labeling prevents researches and case-by-case study. Its obvious result is to stunt growth, rob governments off revenue and citizens the benefits of participation.

FSRCC with all its resources has issued an advisory to a people generally perceived as unwilling to read, listen or watch anything that requires efforts.

What did FSRCC’s Advisory provide?

  • It informs you of the “worrisome increase in the activities of IFOs”
  • Because IFO’s activities “portend grave risk to public confidence and the stability of Nigerian financial system”
  • You are “advised to refrain from dealing with IFO because they “lure and defraud” you “by offering extra-ordinary returns on investments as bait”
  • You are to verify each company’s registration and licence status on CBN’s or SEC’s website before ‘doing business’
  • You are “advised to report any individual or entities suspected to be involved in such nefarious activities to the law enforcement agencies”
  • Members of FSRCC “encouraged to engage in regular” campaigns against the evils of IFO
  • You are to direct more enquires to the Director, Financial Policy and Regulation, CBN or to the Executive Commissioner, Legal and Enforcement, SEC

FSRCC’s Advisory: Minimum or Cavalier?

A studied approach to regulation will promote enterprise, ensure governance and compliance. Absence of clear governance and compliance structures kill every good enterprise.

FSRCC’s Advisory is likely to receive minimum attention from the ordinary Nigerian who is a victim of ponzi schemes and beneficiaries of good practices of unlicenced financial operators.

Some IFO are positively contributing to Nigerian’s economy in many ways that include access to microcredit.

Perhaps, FSRCC may request CBN and SEC to create indigenous classes of micro-credit or investment licence for esusu-related transactions that are not a cooperative society model and all other non-mainstream deposit taking activities in Nigeria.

Osita Enwe heads SRJ’s Fin Tech, Education law and Agribusiness law practice groups



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