NICO Carridice, co-founder and CEO of financial technology company Tarpa Corporation Limited, is calling on microfinancing institutions (MFIs) to “get in line” and prepare to become licensed and regulated entities in time for the implementation of The Microcredit Act, 2021.

In an interview with JIS News, he said that entities must do away with the ridiculous interest rates and underhanded deals to benefit the companies, their customers, and the country in the long run.

The Microcredit Act, which was passed in January of this year, seeks to regulate and license MFIs that offer financial services to individuals and micro-, small-, and medium-sized enterprises (MSMEs).

It will be implemented in July of this year, but institutions will have a 12-month transitionary period to submit their applications for licensing to the Bank of Jamaica.

The legislation will license MFIs and bring them under the regulatory supervisions of the central bank; protect consumers by discouraging microcredit institutions from lending money at excessive interest rates; outlaw predatory lending practices, threats, and intimidation; promote greater transparency through the disclosure of lending rates and other terms of loan products; as well as reduce the risk of the industry being used to facilitate money laundering.

Carridice said implementation of the legislation “is good for the industry because too often, people get scammed and harassed by loan sharks, who charge exuberant interest rates of their customers”.

“This is a big step for the financing industry, as the regulatory body will advise, oversee, and keep the players in check,” Carridice pointed out.

“That is what is needed, and it is very much welcomed by us here at Tarpa Corporation,” he added.

He contended that a number people end up in bad debt because of the high interest rates they are faced with when they deal with the unregulated microfinancing companies.

“This, in turn, negatively influences their credit score, which then affects their ability to get loans from companies like ours,” he pointed out.

Carridice, in outlining the genesis of Tarpa Corporation, said that the company was created out of a challenge he and business partners and co-founders, André Reid and Jason Palmer, faced while they were university students.

The young men had sought financial assistance to participate in a work and travel programme. Unfortunately, none of the entities they approached for financing offered the services they required.

They managed to raise the funds to participate in the work and travel programme, where they not only earned enough money to help settle their student loans, but to also pool together to create a business that helps students who face similar challenges.

“Since then, we have been able to assist students with a similar story to ours, and we have grown so much as a company, where we can now help to repair our clients’ credit,” said Carridice.

“We are really proud of our newest credit repair service because we are pioneers in the game, as we are the first company in Jamaica with the ability to repair people’s credit,” he said.

He noted that over the five years of operation, “we have found that a majority of our potential customers get turned away because their credit score is too low and it would be a major liability lending them money, and some of them had fallen victim to the unregulated MFIs before coming to us”.

“It is understood that there are so many of them who really need access to our services, but we cannot assist them based on the state of their credit,” he continued.

“Tarpa Corporation Limited realises how important it is to have a good credit score, but many Jamaicans are not educated on this matter, so we have now created a solution for such a problem,” he adds.

The other services offered by Tarpa Corporation Limited include education and personal loans, both of which were launched in 2020.

— JIS