Top businessman Dionisio D'Aguilar says the Borrowers' Protection Bill will not protect Bahamian consumers as planned, with institutions likely having "something up their sleeves" to recoup any losses. The president of Superwash said the government cannot control how the financial services industry chooses to react. D'Aguilar, who is also a former head of the Chamber of Commerce, said the initiative would probably backfire. "The banks will counter.
They have something up their sleeve," he said. "They'll know how to react and the government cannot do anything about it." Financial institutions will likely "jack up their fees" or demand mortgage insurance, like in the UK, to ensure a return on their loans. The well-known entrepreneur argued the system would make borrowing much more difficult. "Anything that stops me from collecting money is a concern. The shareholders of the bank need protection.
You don't lend money without the expectation to be repaid," according to D'Aguilar. That said, he noted that it's important to "step back" and understand that the banking community is the most profitable sector, despite the onset of the recession. It's hard for people to feel sorry for banks, he added, especially when the institutions will always find ways to make up any losses in fees. The introduction of the Borrowers' Bill will then have a "trickle down" effect by preventing future Bahamians from getting mortgages.
The Borrowers' Protection Bill, revealed by Guardian Business earlier this week, empowers the Supreme Court to grant relief on foreclosures and the nonpayment of principal or interest. The relief can be introduced before the final judgment, and within a time period which the court deems reasonable. Central to the Borrowers' Bill is its ability to facilitate the government's controversial 10-point Mortgage Relief Plan. Prime Minister Perry Christie confirmed on Monday that the legislation will be introduced and discussed in the House of Assembly today.
Ultimately, D'Aguilar believes it will end up costing Bahamians more money. "You'll have to get insurance and they'll charge you for it. They are the professionals with fees. They'll come up with a fee to compensate," he said. "You may help the people who have mortgages now, but you'll make it more expensive to borrow in the future.
The banks are not stupid." He said the bill "does nothing" to make it easier for Bahamians to understand their mortgage terms. In general, D'Aguilar said more must be done to help borrowers understand deadlines, interest payments and stipulations imbedded in their contracts. "The government should be looking to protect them," he explained. "The average Bahamian does not understand. There should be more protection in that way."
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