Updated: May 29, 2019 3:22 PM
Desperation could lead people to mess with quick lenders, a lawmaker warned.
Leah Scott, Deputy Leader of the Opposition, said those in financial difficulty were drawn to personal loans which could become difficult to repay.
She shared her concerns after The Royal Gazette reported that court summonses were issued to 26 borrowers in a single day by Caribcash Bermuda lawyers.
The borrowers had not made monthly payments of up to $ 1,180.
Amounts owed – from loans dating back to December 2016 – ranged from about $ 400 to almost $ 25,300.
Ms Scott, also the One Bermuda Alliance’s shadow minister for regulatory affairs, said the economic climate could push some people into debt. She said, “We are in a place where people are desperate; that’s when people do desperate things.
Ms Scott added: “We all need to tighten our purse strings because I think we’re going to get into some really tough times.
“If you don’t have to spend the money on something frivolous, save your pennies because the rainy day is approaching.”
The Royal Gazette Victoria Street-based Caribcash Bermuda reported on Monday that since the summons were issued last month, 21 of the people had contacted either the company or its attorneys, Carey Olsen, to resume their efforts to settle their scores .
The company’s website said it offers consumer loans and debt consolidation up to $ 25,000. Taiwo Ogunyemi, director and head of business development at Caribcash Bermuda, said earlier that the company’s operations in the Eastern Caribbean had been successful and had been launched in Bermuda “to help the economy because we know there is a great need there ”.
The former head of corporate banking at Butterfield Bank explained that there are “full” compliance steps to ensure customers have the capacity to repay.
He added, “The majority of our loans go to responsible borrowers who need cash for the events that life is dealing with, such as medical needs, education, construction and other unforeseen expenses. “
Mr Ogunyemi said the company “would love” to get a license, but the Bermuda Monetary Authority did not have an appropriate classification under its Money Service Business license category.
He added today that the company submitted “relevant registration” documents to the BMA last November, including anti-money laundering and anti-terrorist financing policies and procedures.
However, Mr Ogunyemi said the regulator did not complete the necessary processing before Caribcash Bermuda could be listed on BMA’s website as an unauthorized person.
A spokeswoman for the Home Office advised potential borrowers earlier this month to consider the full costs of a loan, including fees and interest.
She added that people should also look at how interest was calculated, when it started being charged, and minimum monthly payments.
The spokeswoman said the government highlighted concerns about predatory lending practices in the 2018 Speech from the Throne and that her consumer team would work with the BMA to develop a consumer protection bill, similar to the Debt Collection Act of 2018, “devoted to transparency and fair 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.
Hard times: Leah Scott, Deputy Leader of the Opposition (file photo).