THE government has approved the Financial Consumer Protection (Disclosure of Credit Information) regulations of 2023, which, among others, shall apply to consumer credit agreements issued by Financial Service Providers as licensed by the regulator.
March 30, 2023
2 min read
Govt approves Financial Consumer Protection Regulations
CBL Governor, Dr Maluke Letete
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The objective of these regulations is to establish a consistent disclosure regime of essential information on credit agreements on financial products and services.
This has been revealed in a government gazette published this week. The Central Bank of Lesotho (CBL), under the leadership of Dr Maluke Letete has also contributed massively towards the implementation of the regulations as the regulator.
In these regulations, a financial service provider shall have formal written policies, procedures, and frameworks for consistent disclosure of essential information on financial products and services duly approved by its board.
“The board and management of a financial service provider shall be responsible for compliance with the requirements of these regulations. The board shall further ensure that management is implementing policies on consistent disclosure of essential information on financial products and services,” the government revealed in the gazette.
It was further shown that a financial service provider shall issue a Key Fact Statement to all consumers requesting information or seeking to obtain a consumer credit product. The content of disclosure of the Key Fact Statement in sub-regulation shall be provided depending on the stage of service or product being offered.
For instance, a Key Fact Statement for a credit product shall contain the name of a financial service provider, an address of a financial service provider, the name of a consumer, contact information, disclosure or application number, and the date of issuance of the Key Fact Statement.
On the other hand, a Key Fact Statement for a credit product shall contain a type of loan whether secured or unsecured, a loan summary, the cost of credit as well as repayment schedule.
A financial service provider that advertises or displays information through a website for instance, shall exhibit a generic Key Fact Statement through a hyperlink permanently displayed near a promotional advert with a warning regarding important information about a consumer loan and allows a consumer to apply for a loan through online means.
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A financial service provider that offers an option to submit a loan application online shall provide a simulator feature that allows a consumer to customize their Key Fact Statement at the shopping stage before submitting a formal loan application among other things.
Furthermore, a financial service provider re-issues a Key Fact Statement before a credit agreement is signed where the information included in a credit agreement differs from a Key Fact Statement provided at a pre-transactional stage.
Those who provide credit through digital channels are required to present a simplified Key Fact Statement when a consumer is inquiring about loan information.