Namfisa warns against unscrupulous micro lenders

The Namibia Financial Institutions Supervisory Authority (Namfisa) has warned members of the public to desist from borrowing money from unregistered micro lenders who ask them to share their sensitive information including bank cards, personal identification numbers (PINs) and personal information.

The warning stems from a recent stakeholder engagement held by the regulator to find ways of promoting transparency and fairness between the microfinancing industry and its consumers.

Namfisa’s consumer education practitioner Uaatjo Kaurimuje says consumers must understand the implications of borrowing from unregistered lenders.

“When borrowing money, consumers have the right to view the registration licence of entities they intend to borrow from. This verification ensures that they are dealing with legitimate and compliant lenders,” Kaurimuje said.

He added that the retention of PINs and cards are prohibited in terms of the Micro Lending Act.

While emphasising the need to educate consumers, Namfisa also warned borrowers who engage in debt while in ill health hoping to have them cancelled for incapacitation.

“Stop borrowing while e.g., on ill-health, on the expectation that the loan will be written off when declared disabled or medically boarded and read your loan agreements to take note of the time frame allowed to cancel the contracts.”

Kaurimuje also said consumers should understand how pension benefits are structured and how they will be paid in the event of retirement or death, in accordance with their respective fund rules.

Additionally, consumers should understand the rules and limitations related to retirement annuities.

“Consumers should know that retirement cannot be cancelled and cannot be paid out as a once-off payment in terms of the Income Tax Act. When it comes to retirement annuities, the maximum allowable monthly increase is 20%,” said Kaurimue.

When it comes to insurance, Kaurimuje said consumers need to be aware that illustrated maturity values at the policy inception stage are projections for illustration purposes and are not guaranteed.

“These values depend on various factors, including partial withdrawals, investment returns and financial market developments. Such actions can affect the overall performance of their insurance policies.

According to him, It is important to understand how premium amounts are calculated and allocated.

“For some policies, a higher composition is directed toward risk benefits, with less allocated to the investment component,” he said.

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