The Micro Finance Regulatory Council says it is making progress in fighting crooked microlenders as borrowers become increasingly aware of their right.
The MFRC’s head of legal services, Jan Augustyn, said raids on and formal investigations into suspect micro lending operations were yielding a better than expected payback ”in the number of unregistered micro lenders successfully prosecuted in court and repayments to borrowers”.
”In the process our investigations resulted in 52 successful prosecutions, fines of R388 000 and we have achieved court-ordered repayments of nearly R186 000 to borrowers,” Augustyn said.
Since July 2000 the MFRC has conducted 1 260 formal investigations into the affairs of microlenders.
About R3,2-million has been voluntarily paid back in 2005 by lenders to borrowers after intervention by the MFRC’s complaints department.
In the most recent case, microlender Amanda Meyer of Port Elizabeth was fined R20 000 or two years’ in prison, along with two years’ correctional supervision and with a further 12 months in jail conditionally suspended for five years. The court clearly made a distinction between other cases where the lender made repayments to borrowers and this case, where the lender argued that she was unable to repay R211 000 to borrowers.
Augustyn says microlenders should take notice of this case as it makes imprisonment sentences for these abuses a reality.
Recently two unregistered pawnbrokers paid admissions of guilt fines in magistrates’ courts in respect of Usury Act contraventions. These are the first successes in respect of pawnbrokers.
”The level and quality of complaints has risen,” Augustyn said.
”And that shows borrowers are becoming more aware of their rights and know when they’re being had. This makes our task easier and we can home in on offenders wherever they might be in South Africa.”
Augustyn said there had been a rise in co-operation between the MFRC and the police, government and prosecutors. – Sapa