The money-lenders from the pillars have not yet rang
Amendments to the Consumer Credit Act, the government hopes, will end forever the semi-legal operation of various credit bureaus and clear public lighting, trams and buses from ads for ‘super-favorable’ loans.
We will talk to Sean Cole after 10 years of experience in credit brokerage. He is the owner of the Good Finance Group, the first domestic credit intermediation agency and Vice President of the Good Finance of Banking Intermediaries.
Does the Consumer Credit Act change forever address the problem of dull players in the credit market?
I believe that changes to the law will only solve part of the problem again. A large number of natural persons who have the ability to place larger sums of their or someone else’s money are constantly looking for ways or loopholes in the law so that they can continue to work smoothly. The structure of these companies, mainly companies, enables them to adapt quickly, and their lawyers, often with international experience, know the articles of the law almost completely.
In addition, loans under USD 1,500 will be regulated by law, and a significant change is the provision that the consumer lending service can no longer be the main activity. Will this not lead to the closure of numerous credit bureaus?
Taking loans below 1,500 dollars will solve the issue of instant, mini and SMS loans. What about the others? Loans with the pledge of everything and everything so far have not been subject to legal regulation. What about apartments that citizens sell to companies, of which they later buy them through ‘rent’ and increased rent. Such an activity cannot be called lending and I do not believe that these changes will be addressed.
To the fact that consumer lending will have to become a secondary activity, many have already prepared themselves several months ago and started fictitious activities so that they can continue their business smoothly.
I believe that changes to the law will still bring some positive changes, but only time will show the holes that will need to be repaired later. In the end, it is a completely fine-tuning process whose cycles should be accelerated.
When it comes to ‘pillar loans’, they are usually associated with usury. Is it a usurious loan?
Money lenders do not advertise. No poster or flyer, no matter where it is placed, is useless. They do not want their name known and made public. When the story of fraud breaks out in the media, have you ever seen the names of these companies on which poster? Additionally, no billboard advertises lenders or creditors but a credit intermediation service.
Credit intermediaries can, however, be licensed, committing themselves to work only with institutions under the ABC or licensed by the Ministry of Finance, and unlicensed who can do as they please.
So is advertising. Only unlicensed brokers may be advertised on the public premises or licensed may be hiding behind an anonymous leaflet, as any company that would advertise would receive a penalty from the public utilities. Companies advertise solely through the usual channels, and from possibly unethical, though very efficient, use privately owned cars of citizens and hand over a leaflet, thus not breaking the law.
The columns advertise characters working in various companies through whose POS machines by credit cards provide citizens with the largest amount of money in cash and for this they take huge commissions, without first and last name, company, address …
Is it a problem at all in the Consumer Credit Act or in institutions that do not do their jobs?
The problem is the harmonization of the law with other laws. For example, when the Ministry of Finance issued its first license to the Good Finance Group in July 2010, all newspapers wrote that the money-lenders from the pillars rang out. But what we actually got. We were given the opportunity to license some and use it for commercial purposes, but we were not given the opportunity to get unlicensed away from the market.
Thus, those who wanted to keep up with market developments became subject to the Anti-Money Laundering and Terrorist Financing Act and a handful of laws, and became the target for the State Inspectorate and endless verifications. I have nothing against checking if they are the price of regulating the market and equally apply to everyone. Others, some of whom are not even licensed today, continue to work because they have nothing to control.
Can’t inspectors prevent unlicensed intermediaries from working?
They just don’t exist. Inspectors should not impersonate themselves, and if presented correctly, the other party simply hangs up. And so, from morning to tomorrow, those who are licensed have to deal with papers, monitoring the Official Gazette, filling in and submitting forms to institutions and, by the way, paying taxes, while unlicensed people cover public areas with leaflets and posters, charge black money and mediate for usury.
Many wonder why they ever licensed. In simple terms, the law is incomplete and contrary, and within the law the institutions have done a good job. The problem is the removal of illegals and money lenders from the market beyond the laws and institutions in charge of that part of the business.