Don’t overlook new consumer credit rules: Warns the Council

02/10/2009 15:26

The Consumer Council is calling on credit providers, not to overlook the new consumer credit rules while engaging in providing goods and services on credits. This law came into force on Thursday 1st October, 2009 will strengthen the functioning of the consumer credit market in Fiji. New rules for consumer credit will not only increase the protection of consumers but also their confidence in consumer credit market.

The new regulations on consumer credit will help consumers to gain improved transparency on products (costs, terms and conditions) and can more easily compare offers. Absence of common rules over the years in buying goods and services on credit led to lot of heartache by the consumers. Consumers have been facing problems with credit a provider who not only prepare contracts but also set interest fees, decide the insurance agency and implements warranties and guarantees.  These contracts were often written to benefit the credit provider but not the consumer.

A major concern of the Consumer Council for many years now is hire purchase which has consistently featured in the top ten most recurring complaints registered with the council annually. In 2008 the Council registered 49 complaints from hire purchase customers which does not include complaints registered with other authorities or those that are never officially lodged because of consumers’ lack of awareness.

Complaints ranged from repossession of goods without prior notice to the consumer, harassment  by bailiff, high interest charged on principle sum rather than the default amount etc. In many instances consumers were not fully aware of the terms and conditions of the credit contract and this has left many at the mercy of unfair repossessions, default charges, etc. There are also cases where items are stolen or destroyed by fire and other disasters but not covered under warranty and the customers is often made to continue payments or pay in full despite insurance cover .

The regulations protect consumers who engage in hire purchase, housing loans, credit contracts and so forth. Amongst other obligations, the regulations require credit providers to provide detailed information to consumers on the terms and conditions of mortgages. Also the law requires credit providers to disclose information on items that the consumers need to know about the credit contract they are committing themselves to.

The Consumer Credit Regulations thus makes it mandatory for credit providers to make pre-contractual disclosure of details in the contract document. The regulations will help consumers understand important issues in the credit contract such as how credit is calculated, credit fees and charges, default interest etc.

The Council is also urging consumers to exercise responsibility and take their time to read and understand all the information regarding their credit contracts. Consumers are often unaware of the fine print of the contract and most sign contracts hastily without thoroughly reading it. The Council stresses that consumer decision on hire purchases often takes a few minutes, but the contractual obligations of repayment can last months and puts pressure on people’s incomes. So while the Consumer Credit Regulations is in force, consumers still have the responsibility to ensure that they arm themselves with all the necessary information and measure the pros and cons of a contract before committing.

Furthermore, since the regulations are now in force, the Consumer Council will be on alert and scrutinise the market for non-compliance and accordingly refer cases to the regulator, the Department of Fair Trading and Consumer Affairs.