Minister urges lending institutions to be more responsible with high-interest loans

By Marlon Madden

Minister of Energy and Business Senator Lisa Cummins has accused some lending institutions of luring in unsuspecting customers with loans that leave them saddled with high payments, and she has appealed to them to be “more responsible”.

On Friday, just over a month away from the popular Black Friday sales, and as Barbadians gear up to ramp up their shopping for the busy Christmas season, the Ministry of Energy and Business, in collaboration with the Ministry of Education and Ministry of Foreign Affairs launched the National Financial Literacy Expansion programme, an extension of the government’s existing Financial Literacy Bureau.

Cummins used the launch to urge lending institutions that provide “quick” loans with exorbitant interest rates to exercise greater responsibility in marketing their loans.

She expressed her concern about the often predatory interest rates associated with these quick cash mechanisms, emphasising that the most vulnerable and financially disadvantaged individuals are frequently ensnared by these seemingly accessible offers.

“A lot of these quick access to cash mechanisms, quite frankly, the interest rates are almost predatory,” said Senator Cummins.

“And it is the poorest of the poor and the most vulnerable who, for survival, sometimes need access to quick cash to be able to do what they need to do to support their families, and they are lured into these things . . . but then the stranglehold around their neck with interest rates is something that becomes untenable.”

The business minister opted not to single out any particular company or segment of the financial services sector but said she was aware that some were offering what looked attractive because of the very little paperwork required to access the loans.

She said lenders should be more responsible in helping customers to better understand what they were signing up for.

“Financial literacy is about, on the one hand, us understanding what we are signing up for, but corporate social responsibility beyond sponsorship is also about more responsible marketing practices,” she said.

The minister said while it was sometimes individuals finding themselves in a desperate situation and requiring quick access to cash, it should also be up to the lenders “not to take advantage of desperation when you see it”.

She said: “I think all of us as individual Barbadians see the advertisements ourselves, and at times we all know people who have found themselves in great difficulty as a consequence of interest rates that are extraordinarily high.

“It looks attractive – $5 000 here or $10 000 there – and ‘all you need to bring is a pay slip’. And then very quickly you realise that you can’t even keep your head above water and you are in a worse position than where you started.”

Senator Cummins also issued a call to the business community to help residents make decisions that were in their best interest, as she advised against putting out advertisements and marketing campaigns to “lure people into doing things that they otherwise could not afford”.

Recalling an advertisement in which a company was offering consumers a ‘buy one, get the other at half price’ deal, she indicated that the half-price item was to be done on hire purchase which meant that the interest on the payments might result in the deal “not being so attractive”.

Minister Cummins said: “I want to make a call to the business community not just to participate by way of sponsorship in financial literacy, but also to demonstrate a level of responsibility and accountability to our community by putting out deals in the marketplace that don’t necessarily attract people into things that they may not really be able to afford in the long term.

“We are going to be doing our part to ensure that we are educating people at all levels . .

. but I also want to ensure that the business community in their advertising and marketing, they are also responsible for Barbadians making the best possible financial decisions they can make.”

The government has partnered with the Barbados Workers’ Union Cooperative Credit Union to implement the financial literacy programme. They hope to encourage other private sector institutions to participate in this initiative, emphasising the significance of improving financial education among the youth.

The programme aims to equip the younger generation with essential financial knowledge and skills so they can make informed decisions, such as avoiding debt traps associated with high-interest loans.

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