CBSL initiates significant revisions to Finance Leasing Act
The Central Bank has initiated significant revisions to the Finance Leasing Act, proposing changes that could transform the finance leasing sector in the country, senior bankers said.
The revisions primarily limit the operation of finance leasing businesses to licensed financial institutions, including commercial and specialized banks and licensed finance companies, effectively excluding non-banking entities from the market.
This consolidation aims to enhance regulation and centralize finance leasing within well-regulated financial entities. Proponents of the amendment argue that this will simplify oversight and enhance consumer protection, while critics worry it might reduce competition and innovation within the sector.
The Central Bank has called for public comment on the issue. This comes alongside the broader movements for oligopolization of the financial system.
One of the key procedural simplifications is the removal of the requirement for leasing companies to submit detailed operating manuals and other extensive documentation for registration.
Additionally, the revised Act introduces stronger protections for lessees, including a clear stipulation that lessees have the right to own leased assets at the conclusion of the lease, provided all financial obligations are met. This measure is designed to prevent lessors from unfairly withholding ownership rights, bolstering legal protections for lessees. The Act also addresses the enforcement of regulations and penalties for unauthorized leasing activities. It introduces harsher penalties and more rigorous enforcement protocols to tackle unauthorized entities, which have been sources of consumer grievances due to opaque terms and predatory practices.
Transparency and fairness in lease agreements have also been enhanced. All lease agreements must now be in writing and clearly state the terms, ensuring that lessees have sufficient information and rights to make informed decisions throughout the lease term.
Moreover, the Act specifies procedures for repossession and managing difficult situations, such as defaults or disputes, the bankers opined. On repossession protocols, the lessor must notify the local police before attempting to recover equipment, providing documentation of their right to do so. Repossession must occur in the presence of a police officer, without using force or intimidation.
On handling defaults and disputes, if equipment is damaged or the lessee faces bankruptcy, the lessor can immediately terminate the lease and repossess the equipment. For other defaults, the lessor must provide at least 14 days’ notice for the lessee to remedy the situation before escalating actions.
Court intervention, if usual repossession procedures are impracticable, the lessor may apply to the District Court for an order of possession. This involves judicial review and potential issuance of an order nisi, which the lessee can contest within 14 days. (TP)
The post CBSL initiates significant revisions to Finance Leasing Act appeared first on DailyNews.