City to report loan sharks for reckless lending
"It is evident that no affordability assessment or feasibility was ever undertaken in most cases to ensure that employees were able to cope with the unsecured loans offered," said the City of Johannesburg in a released statement.
In order to help employees of the City of Johannesburg with loan sharks, the City has decided to assist employees after discovering that some employees were victims of unscrupulous loan sharks.
In a statement released on Tuesday, September 27, the city said that some employees were going home with no salary and this was because of the excessive and questionable loan deductions.
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“Close to 4 000 City employees are affected by these deductions, which total nearly R16 million every month. The law states that no more than 25% of your salary can be legally deducted, and we have halted any deductions which exceed the 25% threshold in order to protect our employees,” read the statement.
The City added that it is aware that some people fell into this debt trap after the lockdown that had severe financial constraints on their livelihoods.
“Over 2 000 employees engaged our Employee Assistance Programme seeking counselling for depression, addiction, and family problems due to financial stress.
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The City said it suspects that a number of these loan sharks are guilty of reckless lending and will be reporting them to the National Credit Regulator as well as Micro Finance Regulatory Council.
According to the statement, it is evident that no affordability assessments or feasibility were ever undertaken in most cases to ensure that employees were able to cope with the unsecured loans offered. “We cannot sit back and allow our employees to be exploited like this.”
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The City plans to increase their offers of financial literacy training and other forms of counselling to support its employees and will ensure that they are not placed in situations that could put them at risk within the workplace.
“While this doesn’t immediately solve the debt trap that many employees have landed themselves in, we can at least ensure that they can expect a decent salary. At the end of the day, no employer can expect their employees to deliver quality services when they are under so much stress and anxiety,” concluded the statement from the City.
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