Consumers to exercise responsibilities

28/09/2018 11:27

It’s a situation that many Fijians are familiar with.

You are in a tight spot financially and need immediate funds to pay urgent bills or fulfil your social responsibilities.

The process of applying for a bank loan may take too long and the reality is that consumers may not meet the minimum requirements to make them eligible for credit.

And rather than borrow from friends and family, visiting a moneylender is a viable option to get fast and easy access to money.

This situation plays out daily and with almost 800 registered moneylenders in Fiji, there is no shortage of vendors providing quick cash.

In some cases, people borrow to clear their utility bills, pay for their children’s school needs, hire purchase repayments or funeral services.

Moneylenders meet a demand in the market and with banks tightening up on loan approvals following the removal of the Data Bureau, moneylending services are enjoying this increased business.

The lenders operate from everywhere- markets, the little sub-urban shops, bus stands, their homes and workplaces. With the cyber-revolution, moneylenders are contacted via Facebook and emails, negotiating and executing transactions 24/7. It’s all so convenient nowadays.

Under the Moneylenders Act Cap 234, licensed moneylenders are allowed to charge 12 per cent fixed interest per annum. This rate is lower than interest rates charged by many banks in Fiji and is another reason that consumers continue to patronise money lenders.

However the Council continues to receive complaints from consumers regarding moneylenders who routinely charge fixed interest rates of 20 per cent per week and in some cases as high as 40 per cent.

There are cases where moneylenders have recovered 200 per cent of the initial amount loaned out, putting consumers in extremely difficult positions. This behaviour by moneylenders is unacceptable.

They are taking advantage of consumers and a lack of enforcement of the Moneylenders Act to charge exorbitant interest rates.

This was the case for Maria, a consumer who had visited a moneylender for a loan. She had requested the amount of $660Maria also made a deal with the Money Lender to begin repayments in four months as this was when her spouse was scheduled to begin his employment.

The moneylender agreed to these terms but Maria did not get a written contract stating the same.

When the four months had elapsed, Maria responsibly approached the moneylender to begin repayments, only to discover that the moneylender had charged her 20 per cent interest for each fortnight of the elapsed four months.

This meant that she was now liable to pay back $2340, more than 300 per cent of the initial amount borrowed. The moneylender also further threatened to visit her at her workplace if she did not pay the full amount.

Maria was distraught at the thought of having to pay the exorbitant amount but resolved to take responsibility for the payments.

She began making repayments but after managing to pay off $1,500, she rightly sought the council’s assistance and advice on the case.

The Council intervened and advised the moneylender that it was illegal to charge interest rates of more than 12 per cent per annum.

This resulted in the moneylender waiving the outstanding balance and agreeing to repay a portion of the overpaid instalments.

Moneylenders who take advantage of consumers in cases like this are breaking the law and can be charged under the Money Lenders Act.

Under no circumstances can moneylenders charge more than 12 per cent interest per annum.The Council wishes to advise consumers of their rights and responsibilities when taking money from moneylenders.

This will ensure that they are not taken advantage of.Moneylenders are required under the Moneylender Act to ensure that they have a written contract that satisfies all provisions in the Act.

The contract should clearly state all terms and conditions and should have been read and agreed to by the consumer before signing.It should also state the interest rate charged on the amount borrowed.

Note that it is illegal to charge more than 12 per cent interest per annum on the amount borrowed.

The council would also like to advise consumers that all moneylenders must be registered with the Registrar of Moneylenders and must have valid licenses.

They are also required to affix boards bearing the words “Licensed Moneylender” outside their authorized addresses.

Moneylenders must also provide receipts to consumers for any repayments made.

Consumers can further lodge any consumer complaints they have by calling the National Consumer Helpline on Toll Free Number – 155.