Minister of Finance and Public Service Dr Nigel Clarke said that the Government will ensure vigilance in administering and enforcing the Microcredit Act in a bid to protect the microfinance subsector from “nefarious players” — stopping short of using the term loan sharks.

Speaking at the launch of BlueStart Capital — which will trade as Courts Ready Cash — at the Courts headquarters on Slipe Road in St Andrew yesterday, the finance minister argued that the regulation was necessary both to protect consumers as well as to comply with international requirements for combatting money laundering.

Dr Clarke recounted that when the Microcredit Act was initially introduced to Parliament, it created much “consternation and concern because we had a sector that had grown tremendously over the previous 20 or 30 years totally unregulated.”

“Unfortunately, what happened …because it was unregulated, you had practices that developed that were not conducive to the wholesome development of Jamaica,” he continued.

One of the maladies of the unregulated microcredit environment, the minister pointed out, was the “filtering” of illicit financial gains in the form of loans. Now, with the Act, the Bank of Jamaica (BOJ), which will regulate the space, can apply sanctions to ensure compliance and dissuade predatory behaviour.

Under the Microcredit Act, lending institutions are required to adhere to standards of advertising loan products including interest rates. Dr Clarke also noted that interest rates should be comparable to others in the market and that there is a framework for collecting payments.

“You can’t just go beat down a man door and say he owes you money,” the minister declared, adding that the “Government is “extremely serious in enforcing these regulations, particularly when it comes to consumer protection and protecting microcredit customers”.

“Jamaica needed this regulation because it left us vulnerable to nefarious players abusing the microcredit [sub]sector,” Clarke said.

The minister outlined that as the country addresses development issues and aim to meet international standards and best practices, it will be necessary to engage in further reform. While he admits that the reform process is tedious, and that achieving compliance with the microcredit regulations can be lengthy and requires a lot of information, he said provided time for players in the industry to “come forward” and regularise themselves.

So far, the BOJ has issued 13 licences to microcredit institutions out over a 100 applications. Last week, the Michael Lee-Chin Jr-led Seed Investments Limited became the latest licensee.

Dr Clarke commended the management of Unicomer Jamaica Limited for its leadership in creating BlueStart Capital, a separate entity through which it will offer loans to the public. He also urged the public to provide information on microcredit players that have not received approval to operate.