MFSA Try To Stop New Fees

MFSA Go To Court

Micro Finance South Africa have made an urgent application to court to have the new fee regulations (coming into effect in early May), which will see fees for unsecured credit greatly reduced, prevented from coming into effect.

50% of Micro Finance Credit Providers in Danger

MFSA represent most micro financing credit providers across SA. They are concerned that the proposed changes to the fees that credit providers can charge on credit (a drop of around 7% currently) will see between 30% and 50% of all their members go under. They say this will then lead to more people approaching unregistered parties for loans (ie illegal loan sharks).

In court papers submitted to the North Gauteng High Court, MFSA want to prevent the fee changes coming into effect at this time until further research is done. MFSA say that the fee structure needs to be reviewed properly and additional research conducted before any change is made. They say that they cannot find evidence of any macro economic impart assessment having been done prior to the announcement of the new fee structure.

The Members of Parliament Portfolio Committee on Trade and Industry feel that the changes are actually not extreme enough and that consumers are still being taken advantage of in many cases. At consultation phase MFSA were able to make comment on the proposed changes which the DTI went ahead with. Credit providers are allowed to charge the maximum amount but do not have to. MFSA on the other hand, warn that the changes will see many of their members go out of business. This will have further economic impact. MFSA further say that a reduction in fees is actually the opposite of what their members need to be able to offset increases in running costs and compliance with increased regulation.

See You In Court

It seems that the NCR and DTI will oppose the application. The matter will be heard on the 3rd of May 2016 (just before the deadline of the 6th when the changes are meant to come into effect).