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Scott: desperate people turning to fast cash

Desperation could lead people to get in over their heads with fast-cash lenders, an MP has warned.

Leah Scott, the deputy Opposition leader, said that people who were struggling financially were attracted by personal loans that might become difficult to repay.

She raised concerns after The Royal Gazette reported that court summonses were issued to 26 borrowers in a single day by lawyers for Caribcash Bermuda.

The borrowers had failed to make monthly instalments of up to $1,180.

The amounts owed — from loans dating back as far as December 2016 — ranged from about $400 to almost $25,300.

Ms Scott, also the One Bermuda Alliance shadow minister for regulatory affairs, said that the economic climate could tempt some people to get into debt. She said: “We're in a place where people are desperate; that's when people do desperate things.”

Ms Scott added: “All of us need to tighten up our purse strings because I think we're going to be entering into some really challenging times.

“If you don't have to spend money on anything frivolous, save your pennies because the rainy day is on its way.”

The Royal Gazette reported on Monday that Caribcash Bermuda, based on Victoria Street, said that since the summonses were issued last month, 21 of the people had contacted either the company or its lawyers, Carey Olsen, to resume efforts to settle their accounts.

The company's website said that it offered consumer loans and debt consolidation up to $25,000. Taiwo Ogunyemi, a director and business development manager at Caribcash Bermuda, said earlier that the firm's operations in the eastern Caribbean had proved successful and that it was launched in Bermuda “to help the economy because we know there's very much a need out there”.

The former head of business banking at Butterfield Bank explained that there were “comprehensive” steps for compliance to ensure that customers had the ability to repay.

He added: “The majority of our loans go to responsible borrowers who need liquidity for the events life deals them, like medical needs, education, construction and other unanticipated expenses.”

Mr Ogunyemi said the company would “love” to be licensed but that the Bermuda Monetary Authority did not have a suitable classification in its Money Service Business licence category.

He added today that the firm submitted “relevant registration” documents — including anti-money laundering and antiterrorist financing policies and procedures — to the BMA last November.

However, Mr Ogunyemi said the regulator had not completed the processing needed before Caribcash Bermuda could be listed on the BMA website as a non-licensed person.

A Ministry of Home Affairs spokeswoman advised potential borrowers earlier this month to consider the complete costs of a loan, including fees and interest.

She added people should also look at how interest was calculated, when it started to be charged and the minimum monthly payments.

The spokeswoman said that the Government had highlighted concerns about predatory lending practices in the 2018 Throne Speech and that its consumer team would work with the BMA to develop a consumer protection Bill, similar to the Debt Collection Act 2018, “devoted to much needed transparency and equitable treatment of consumers who use banking and insurance services”.

UPDATE: This story has been updated to clarify that the registration process with the BMA was not complete.

Challenging times: Leah Scott, the deputy Opposition leader (File photograph).

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Published May 29, 2019 at 9:00 am (Updated May 29, 2019 at 3:22 pm)

Scott: desperate people turning to fast cash

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