Microlenders face deregistration
Namibia Financial Institutions Supervisory Authority ( Namfisa) is threatening micro-lenders who do not comply with plans to refund overcharged customers with cancellation as registered micro lenders.
Namfisa said this week micro-lenders have five years to repay N$1.9 million incurred through overcharging customers. The financial regulator will identify micro-lenders who are in contravention through the compulsory submission of quarterly returns to Namfisa together with refund plans which the regulatory authority has endorsed.
Namfisa instructed micro-lenders to furnish regular updates on the status of refunds. Non-compliance with the Refund Plan will result in action being taken against the micro-lenders concerned. Such action may include the cancellation of the registration of the micro-lender.
Namfisa will also look at the number of complaints it receives from customers in pinpointing the guilty micro-lenders.
Rachelle Metzler from Namfisa said that micro-lenders borrow money at an interest rate calculated at twice the average prime rate per annum with the current rate at 18.5%.
She said the Financial Institutions and Markets Bill (FIM), soon to be promulgated, will give the authority the legislative muscle it lacks due to regulatory challenges. The current regulatory environment was described as disjointed, inconsistent and exacerbating the cost of regulation. “There is no recognition for inter-linkages in the financial sector, locally, regionally and internationally” she said pointing out that the slow reform of a non-responsive legislative framework does not support the objectives of the Namibian Financial Sector Strategy (NFSS) which aims to provide a long-term development strategy for the Namibian financial sector.
Namfisa spokesperson Isaack Hamata said that a consumer protection legal framework in the financial sector will ensure transparency and disclosure as well as address consumer complaints.
Both the NAMFISA and FIM Bills strive to incorporate provisions to give effect to the relevant policies as outlined in the NFSS.
Namfisa in partnership with other stakeholders will repeal the Usury Act and craft the Consumer Credit Legislation Act. Hamata further added that, “For now, the Usury Act which prohibits the retention of bank cards and PINs of borrowers.”
will remain the main legislation governing the business of micro-lenders in Namibia. Enforcement action will be taken against micro-lenders found in possession of bank cards and PINs of borrowers.”
Namfisa CEO Phillip Shiimi urged consumers to spend wisely this festive season as records show that debt is on the rise and according to Shiimi, this spending leads to more people approaching banks, micro-lenders, and worse, loan sharks.