NIGERIA Law and Practice Contributed by: Isa Alade, Seyi Bella, Ayodele Adeyemi-Faboya and Ayomikun Ogunkanmi, Banwo & Ighodalo
9. Regtech 9.1 Regulation of Regtech Providers There is no substantive law that regulates regtech providers in Nigeria. However, depending on the nature of the tools adopted and the services provided, the activities of regtech companies may be regulated by cross-sectorial laws and/ or regulations. An example of such regulation is the NDPA. Accordingly, regtech providers whose activities entail the processing of personal data of data subjects would be bound to comply with the provisions of the NDPA. Where the activities of regtech providers involve the processing of personal data of a customer of a financial insti - tution, for example, such regtech company will be directly obliged to comply with the provisions of the NDPA. 9.2 Contractual Terms to Assure Performance and Accuracy Generally, the nature and terms of the contract between financial services firms and regtech providers are predominantly governed by the contract’s general principles and the parties’ agreed terms during negotiation. Notwithstanding the existence of such con - tracts, financial services firms have a duty to ensure that specific contractual terms/clauses are inserted in service contracts to make the services consistent with regulatory provisions. Through the Consumer Protection Framework 2016, the CBN imposes a duty on financial ser - vices institutions to ensure that they put effective consumer risk management frameworks in place to protect consumers’ information and assets. Consequently, financial services firms – when contracting with regtech providers – insist on assurances that the regtechs accurately process and adequately protect consumer details.
Rules provide that robo-advisers must – at a minimum – disclose in writing the following to their clients: • assumptions, limitations and risks of the algorithms; • circumstances under which the robo-advisers may override the algorithms or temporarily halt the robo-advisory service; and • any material adjustments to the algorithms. In addition, robo-advisers are required to have policies, procedures and controls in place to monitor and test the algorithms regularly to ensure that they are performing as intended and – at a minimum – processes and controls to detect any error or bias in the algorithms. The 2025 Guidelines For Insurtech Operations In Nigeria (Insurtech Guidelines) were recent - ly introduced, which created two classes of insurtechs: • standalone insurtechs, who are required to obtain reinsurance cover as required by NAI - COM; and • partnering insurtechs, whose operations are underwritten by a licensed insurer. However, we have yet to see how these regula - tions will play out in practice. 8.2 Treatment of Different Types of Insurance Under the Insurtech Guidelines, products shall be categorised as contained in the Insurance Act and other Guidelines as the Commission may approve and release. 8. Insurtech 8.1 Underwriting Processes
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