Windhoek — The regulator of the Namibian financial industry, the Namibia Financial Institutions Supervisory Authority (Namfisa), says the Micro-lenders Association has had more than 10 years to come up with an alternative payment plan that does not include retaining customers' bank cards and PIN numbers.
In a full-page advert that appeared last week Friday in newspapers, Namfisa warned that it is in the process of "considering the most appropriate action to be taken against micro-lenders found in possession of cards and PINs of borrowers."
The advert responded to an article that appeared in New Era last week that the regulator was ordered to return bankcards confiscated from micro-lenders. The regulator said it returned the bankcards to micro-lenders who then had to return the cards to the borrowers. The article interviewed the Micro-lenders Association's (MLA) chairman, Ronald Weber. Namfisa has not responded to questions from New Era, saying it chooses not to deal with the issue through the media.
In the adverts, Namfisa also warned micro-lenders who "coerce" borrowers into signing a mandate or declaration authorising the retention of their cards and PINs that such a document is "illegal, null and void from inception and cannot purport to give micro-lenders powers which are in conflict with the provisions of the law."
Namfisa's statement contradicts Weber, who had earlier told New Era that "everyone in the industry, including the regulator, agreed that until another payment or mechanism was available, cards and PINs are the only viable and realistic collection method." The interview with Weber took place after Namfisa confiscated cards and PINs from micro-lenders. "As matters are, there is currently no alternative viable payment method available in our financial or banking system. This must be facilitated under Namibia's banking and payment system over which the MLA and their members have no control," Weber had said.
In the advert Namfisa refutes Weber's statement, saying that the intention to enforce the prohibition against the retention of cards and PINs of borrowers was confirmed with effect from 1 March 2012. "A circular in this regard reference II/ML/2/2011 and dated 22 December, 2011, was issued to micro-lenders giving them notice that, with effect from 1 March 2012, Namfisa would ensure strict compliance with the provisions of the law," stated the regulator.
Furthermore, in contrast to the statement by the MLA, Namfisa says it was informed in February this year through the association's legal council that the MLA would have an alternative payment solution in place by 31 August 2012 already. "Contrary to their advice, there is, after nine months, still not a solution available. It is further very important to note that the prohibition against the retention of cards and PINs by micro-lenders has been in existence for at least 10 years and the micro-lending industry still insists on using this collection method notwithstanding the fact that it is prohibited. This is despite the fact that micro-lenders were given ample opportunity (more than 10 years) to find a suitable payment mechanism. To date they have failed to do so," Namfisa's Registrar of the Usury Act, Phillip Shiimi said.
According to the law, a micro-lender may not as security or for collection arrangement purposes, keep in possession or make use of any bank cards or personal information such as PIN codes of the borrower.