CBN Rolls Out New Rules for Loan Disputes Between Customers and Banks
The Central Bank of Nigeria (CBN) has issued an exposure draft proposing the establishment of a 30-member Mediation and Dispute Resolution Panel (MDRP). This initiative is designed to enhance consumer protection and strengthen confidence in Nigeria's financial system by providing a structured mechanism for resolving disputes.
Panel to Operate Under STMA Act
The MDRP will function under the Secured Transactions in Movable Assets (STMA) Act of 2017, which outlines a mediation framework for civil disputes between creditors and grantors related to secured transactions involving movable assets. According to a circular signed by Paul Oluikpe, the acting director of the Development Finance Advisory Department, this move is part of broader efforts to improve the financial ecosystem, ensure compliance with laws, and enhance the efficiency of financial intermediation.
The proposed framework aims to offer a specialised, cost-effective platform for resolving issues concerning the creation, perfection, and enforcement of security interests in movable assets. It emphasizes transparency, fairness, and efficiency within the system, positioning the panel as the first point of recourse for dispute resolution under the Act.
Composition and Tenure of the Panel
Under the draft guidelines, the CBN will appoint 30 professionals to form the panel. These members will serve on a rotational basis, with each dispute resolution panel comprising three individuals. The initial term for members is set at four years, with the possibility of reappointment for an additional four-year term based on performance evaluation. However, no member can serve more than two terms, whether consecutive or not.
Members must possess at least 10 years of relevant experience in fields such as law, banking, finance, mediation, arbitration, alternative dispute resolution, or financial regulation. They are required to demonstrate integrity, professional competence, and sound judgment. The CBN stated, "Upon satisfactory performance, determined through an evaluation by the CBN, members may be reappointed for an additional term of four years. The tenure of members shall not exceed two terms of four years each, which need not be consecutive."
Context and Broader Financial Reforms
This development comes amid ongoing efforts by Nigerian authorities to regulate the financial sector and protect consumers. Earlier in January 2026, the Federal Competition and Consumer Protection Commission (FCCPC) reported that 457 companies had secured full approval to operate as digital lenders in Nigeria, with 35 others receiving conditional approval and 103 under surveillance. These measures aim to prevent citizens from patronizing unregulated apps and avoid unethical practices like harassment or public shaming in loan collection.
For borrowers, key factors when choosing loan apps typically include the speed of disbursement, flexible repayment options, and interest rates. The CBN's new proposal aligns with these consumer concerns by establishing a formal dispute resolution process, potentially reducing conflicts and fostering a more trustworthy financial environment.
The exposure draft is now open for public feedback, marking a significant step in Nigeria's financial regulatory landscape as it seeks to balance innovation with robust consumer safeguards.
