By TKay Nthebe
As the Government of Lesotho continues to build a financial services industry that protects the rights of consumers, it is important for consumers of financial products and services to educate themselves on the relevant laws. In previous articles and videos, I have discussed the Financial Consumer Protection Act of 2022, which seeks to protect and outline the rights of consumers of financial products and services.
This week’s article focuses on the Financial Consumer Protection (Disclosure of Credit Information) Regulations of 2023, which came into effect on 24h February 2023.
What is the objective of these Regulations?
Following the promulgation of the Financial Consumer Protection Act, the Disclosure of Credit Information Regulations applies to consumers of financial products and services who wish to enter into credit agreements with licensed financial service providers. The objective of the regulation is to establish a regime where essential information on credit agreements on financial products and services is disclosed.
What should you know about the Regulations?
To explain some clauses of the regulations, I will use an example. Meet Thabo, a 37-year-old working in the public sector, who needs a loan of LSL75 000 and decides to approach a credit provider like a bank. For Thabo to be assisted, the Regulations require the following.
- The credit or financial service provider must give Thabo a Key Fact Statement. This is a document that explains features and simplifies the credit agreement so that Thabo understands it.
- The following information should be included in the Key Fact Statement.
- The name and address of the financial service provider.
- The name and contact information of the consumer i.e. Thabo.
- Application number and a date when the Key Fact Statement was issued.
- The type of loan Thabo is applying for and whether it is secured or unsecured. A loan summary includes the loan amount, duration of the credit agreement, how much interest is charged and other applicable fees. Also, refer to the article titled ‘Take stock of your debt levels in 2023’ available at bit.ly/3NSxVu1
- The financial service provider must issue Key Fact Statements in any of the official languages (Sesotho or English), depending on the consumers’ preference.
Can Thabo shop around for the best available product or service?
Yes, Thabo has the right to shop around for the best offer and compare financial products and services. Thabo also has the right to review the offer in the Key Fact Sheet before deciding.
As a consumer of financial products and services, you are responsible for familiarising yourself with all laws and regulations that protect your rights. Make sure to download the Financial Consumer Protection Act of 2022 and subsequent regulations available on the Central Bank of Lesotho’s website. You can also follow Leruo, available every Friday in the Reporter Newspaper, listen to the radio edition on Wednesdays and Thursdays, follow Alliance on social media platforms or visit www.alliance.co.ls for more information.
Disclaimer: The views expressed in this article are those of the author.
