Barbadians need to live within their means.
This was the position of Opposition Senator Crystal Drakes who, during her contribution to the Fair Credit Reporting Bill, 2021 in the Senate on Monday, also suggested that legislation to crack down on predatory lending practices was imperative.
Particularly in a difficult economic situation compounded by the COVID-19 pandemic, Drakes suggested that Barbadians “really have to find a way to make do with what we have”.
“Too many times, we have individuals who may be starting a family; they are just two individuals who got married … and because the bank has approved you for a $500,000 home, five bedrooms, three bathrooms, and that is in the upper bracket of what you can afford, it doesn’t mean that you have to take that loan. There has to be a concept that people know ‘I have to be financially prudent’ because a lot of financial strain causes a lot of marriages to [dissolve],” she said.
“The bedrock of any community and any society is the family, so we also see that this implementation of having a good understanding of financial literacy is not just financial in nature, but it also has social [implications].”
The Senator pointed to the need to help Barbadians become more financially literate.
She said that due to how some loans were advertised, people were not aware of the fine print – the terms and conditions that outline a payment plan and structure.
“So, what has to happen is we really have to engage the citizens of this country as it relates to financial literacy because there are many Barbadians who probably still don’t even understand the concept of compound interest…. So there is that type of understanding that has to happen across Barbados because we cannot penalize persons by instituting a credit score when there is clearly a need for greater financial literacy. At this moment, I believe there are a lot of young people out there who believe that because they are pre-approved for something, they can afford the payment plan,” Senator Drakes said.
Although saying the Fair Credit Reporting Bill has merit, she noted there was still a need for legislation that goes further in regularizing the financial system and the credit offered to Barbadians.
This, the Opposition Senator contended, would bring an end to predatory lending. For example, she noted, it is currently easier for an individual to be pre-approved for a loan for conspicuous consumption – such as a car purchase, shopping spree or cruise – than it is for a person who wants to set up a business.
Senator Drakes emphasized the importance of the Government finding ways to intervene to make sure there is greater utilization of the resources in the banking industry that enhance the real economy.
“….Whether it is a code of ethics or some other regulatory instrument that we can hold these companies accountable too.
“We are holding the individual accountable by passing this legislation today because if you don’t have the right credit score the likelihood of you being denied access to credit is a lot greater after this Bill has been passed. So, on the other side of that relationship, I am hoping that the Government finds it imperative to draft legislation that also calls for fair and ethical lending standards in Barbados,” Senator Drakes said.
“What has to happen in the 21st century, as a lot of things move and shift in this transition period due to COVID, banks now have to become invested in the real sector and driving the real economy because there is a disconnect at the moment. And we have to promote or reward lending agencies that are going to consciously use the monies that are within their facilities to create positive social, ecological and cultural change and not just rely on profits as their standard for success,” she added. (KC)
