Fintech lenders in Nigeria frequently face legal action from their borrowers. Often, these borrowers, who have outstanding debts, initiate court proceedings to stall or avoid repayment altogether. One common claim made by borrowers is that a fintech lender has violated their constitutional rights by involving the Nigerian Police in the debt recovery process. In other cases, a borrower will allege that a fintech lender has violated his/her data privacy rights. In a recent case filed by a borrower against a fintech lender[1], we successfully argued, on behalf of the fintech lender, that the fintech’s actions were lawful and did not constitute a violation of the Borrower’s constitutional rights.
Material Facts
The total principal amount of the loan was N70,000,000 (Seventy Million Naira). At the time the fintech lender took steps to enforce the repayment of the principal amount and interests payable, the Borrower had not repaid up to 10% of the principal amount.
When the fintech company took steps to enforce the repayment of the principal amount and interests payable, the Borrower filed an action in court claiming over half of the principal amount as damages for an alleged constitutional rights violation. It is useful to note that the fintech company, in this case, engaged the Nigerian Police during the debt recovery process.
Decision
- Although the Nigerian Police is not be involved in the recovery of debts, being a civil matter, a citizen who is arrested by the Police in the legitimate exercise of their duty and on the grounds of reasonable suspicion of having committed an offence cannot sue the police of breach of his/her fundamental human rights.
- The fintech lender is not liable for the monetary damages claimed by the borrower.
Final Analysis
The successful outcome of the case hinged on three key factors: (a) a meticulous analysis and presentation of evidence presented to the Court on behalf of the fintech lender, (b) a comprehensive loan contract that effectively addresses all risk and cost factors stemming from loan defaults, and (c) a painstaking effort to emphasize to the court, the significance of retail lending markets to the broader economy.
Our Fintech team primarily act for banks, finance houses, fintechs and lenders who are looking to recover debts or to defend a borrower/customer action for the breach of data privacy, contractual or constitutional rights. The foregoing case study is not intended to constitute legal advice and is not prepared with a specific context in mind. Kindly seek professional advice specific to your situation. You may also reach out to your usual Balogun Harold contact or contact us via support@balogunharold.com for support.
[1] Balogun Harold represented the fintech company in this matter.
