The platform which offers investors a guaranteed annual return of 19.5% was the subject of a number of articles published in Moneyweb recently.
The article titled, Are Cambist’s contracts genuine, points out that the focus has shifted from the sale of emolument attachment orders (EAOs) to the purchase of cell phone contracts, again with a guarantee of a 19.5% annual return.
The Moneyweb article raises questions about the new venture, and problems the journalist experienced in trying to get clarity on suppliers, and the structure of the contracts.
Earlier, Cambist, in an interview with Hannah Barry of Moneyweb, confirmed that its parent company, OneLaw, was reducing staff in the wake of a decline in the number of emolument attachment orders, and was looking at new revenue streams.
The article, Cambist’s parent company to retrench staff, confirms the move away from EAOs:
Van den Bout (OneLaw’s COO) said Cambist was discussing stopping the sale of EAOs on its platform but had not yet made a firm decision in this regard. “It depends on the availability of the product and the appetite to buy it,” he said. The sale of “other matters”, such as cellphone and sales contracts, now accounted for a much larger share of contracts sold via the platform.
“New EAOs currently constitute about 5-10% of the contracts offered for sale on the Cambist online platform,” Van den Bout said.
Under the heading “Easy in, easy out”, the Cambist website states: “Buyers can regain their funds by selling their contracts again on the Cambist Online Platform.”
This naturally depends on whether there will be buyers.
This was, of course, what prominent property syndications also promised. The problem there was that the downturn in the property market led to a scarcity of buyers, leaving people stranded with their unlisted shares. Could the same situation arise with the current state of affairs in unsecured lending?
Business Day recently reported about an interesting court challenge to establish the legality of current practices in unsecured lending:
In an unprecedented legal challenge, the University of Stellenbosch’s Legal Aid Clinic (LAC) is taking on the justice and trade and industry ministers, the National Credit Regulator, 13 microlenders and a law firm in a case that could overturn the microlending system that has crippled thousands of consumers.
The case against the legality of emoluments attachment orders (EAOs) served against the 15 clients the LAC represents includes challenging the constitutionality of sections of the Magistrates’ Courts Act, which allows an indebted consumer’s salary to be attached without adequate court oversight. If the LAC is successful, the days of unscrupulous microlenders and debt collectors may be numbered.
While the outcome of the legal challenge is still a long way off, one hopes that the media focus will lead to investigations by the authorities to protect those least capable of fending for themselves.