Money Lenders Facing Regulatory Crackdown

• A crackdown that aims to reverse “non-existent” consumer protection from unregulated money lenders will take effect in the 2022 second quarter. The Bahamas intends to close what is considered to be “a very big gap” in safeguarding its citizens from predatory lending practices by persons and entities operating outside the established financial services supervisory environment.
• Executive Director at Securities Commission, Christina Rolle spoke out after the regulator, which oversees the capital markets, financial and corporate services providers, and investment fund sectors. The draft Money Lenders rules was released for the third round of industry consultation amid hopes it will prevent Bahamians from falling prey to practices such as sky-high interest rates that exceed the lawfully allowed 20% maximum. 
• The rules, which will capture all money lenders and require them to operate as companies or other legal entities, rather than as individuals, also prohibit such persons/firms from using physical violence, threats or other forms of intimidation against a borrower or their family members when collecting loan repayments and debts.
• She explains that no penalties for such ‘loan shark’ type tactics are contained in the rules, which make clear that both guilt and punishment is to be determined by the Supreme Court, but they do impose far more stringent transparency requirements on non-bank lenders not covered by the Financial and Corporate Services Providers or any other financial services-related Act.
• This crackdown could however reduce access to financing for citizens in the lower-income brackets and could adversely impact consumption.

 (Sources: The Tribune & NCBCM Research)