Central Bank submits plan to regulate consumer credit

POSTED: 08/2/16 9:41 AM

ORANJESTAD – The Central Bank of Aruba recently submitted a proposal to Finance Minister Angel Bermudez for the regulation of consumer credit, the Amigoe reported yesterday. The main objective of the initiative law is to make sure that consumers are sufficiently informed before contracting a loan.

The bank also wants to set a limit for the interest moneylenders are allowed to charge; it also wants to prevent that consumers are able to borrow more than they are able to pay back. The proposal is on the desk of Minister Bermudez, the Central Bank reports in its annual supervision report for the financial sector.

The proposal does not mention the establishment of a credit registration bureau, as proposed earlier by the Caribbean Credit Bureau. This organization hosted a mini conference about credit registration on Aruba in 2014.

Rob Reijnaert of the Central Bank of Curacao and St. Maarten told the Amigoe at the time that a well-managed credit registration bureau could make an important contribution to financial stability with benefits for lenders and borrowers.

“The existence of a credit bureau could put pressure on borrowers to pay back their loans and to prevent this way that they end up on a list of doubtful debtors,” Reynaert said.

Maintaining a safe database could also contribute to the prevention of identity fraud; it is also a possible tool for the Central Bank to monitor certain system risks.

In the Netherlands the law on consumer credit was established in 1990. The law aims to protect consumers and contains rules moneylenders have to follow. The law sets a maximum interest level for money lenders: the legal interest plus 12 percent. Consumer credits higher than €40,000 (around $44,000) do not fall under this law.

Did you like this? Share it:
Central Bank submits plan to regulate consumer credit by

Comments are closed.