Microfinance Regulator Boss Warns Money Lenders Against Violating Client’s Privacy

The newly appointed Executive Director of Uganda Microfinance Regulatory Authority has warned money lenders against demanding for national identity cards, bank ATM and passport as security for loans.

Edith Namugga Tusuubira says demanding for such documents amounts to a violation of principles of consumer protection and infringes on the privacy of customers.

Her warning is based on the 2016 Tier 4 Microfinance Institution and Money Lenders Act which, prohibits the use of bank ATMs, warrant books, passports and national identity cards as collateral.

‘For instance, we are no longer accepting lending using security as someone’s national ID, which has been the practice. We no longer accept security in form of someone’s passport because it is intended for identification,’ Tusuubira said.

‘We, also, no longer allow organisations to take people’s ATM cards. Those are some of the practices that UMRA is trying to curb. We also believe that if you operated under UMRA standards, there will be improved trust between the two parties that are transacting under the Tier 4 law,” Tusuubire added.

Tusuubire revealed that the Authority plans to carry out nationwide sensitization programs to create public awareness of the regulatory requirements for money lending, starting this financial year.

The law safeguards people seeking financial services from money lenders. It spells out stringent measures for persons trading as money lenders, who are required to register as corporate entities before transacting business.

The Uganda Microfinance Regulator Authority is charged with licensing and supervising money lenders.

Edith Tusuubira ascent to the helm of the authority in May, 2019 after the Board approved her to replace Elly Avu Biliku, who was the acting Executive Director since 2017 when the authority was established.

In an interview with theCooperator, she promised to tighten her grip on all the Tier 4 Microfinance Institutions and money lenders.  Tier 4 microfinance institutions include Saccos, non-deposit taking microfinance institutions, self-help groups and community based microfinance institutions.

‘Historically, we have had many people borrowing and lending money informally and, sometimes, at a point of disagreement; it is not very easy for you to tell who is doing the wrong and the right thing,” said Tusuubira.

As such, Ugandans are encouraged to embrace the Tier 4 Microfinance Institutions and Money Lenders Act by obtaining licenses from UMRA that will allow them carry out business legally.

‘I picture a well-regulated microfinance sector with information that is reliable and dependable, a fully regulated financial system whereby transactions are covered, with UMRA under Tier 4 Microfinance and Money Lenders Act,’ says Tusuubira.

Tusuubira envisions curtailing fraud, with a system that identifies clients with a unique identification code and where the various financial systems communicate with each other and track transactions of any kind.