RBF policy welcomed, but misses some Credit Providers04/10/2012 15:17
The Consumer Council welcomes the Reserve Bank of Fiji’s (RBF) revised disclosure requirements for licensed credit institutions announced by the bank yesterday (3/10/12).
An important initiative in the RBF’s Banking Supervision Policy Statement No.8B: Accountability and Disclosure Guidelines on Interest Rates, Fees and Charges for Licensed Credit Institutions in Fiji is the standardization and details on fees, charges and interest rates that need to be disclosed to consumers and the public. The new policy replaces the previous one implemented in 2002.
For consumers some of the changes are positive that will bring about more transparency and clarity in information given to consumers by credit institutions that will assist in making an informed decision. For example:
- Fees and charges to external parties, e.g. solicitors’ fees, valuation fees etc, credit institutions (CIs) must be disclosed to consumers and consumers be notified of the third party fee or charge, including (where possible) the amount. Previously CIs simply need to put customers “on notice that a third party fee or charge may be applicable”.
- CIs will be required to disclose the length of time the promotional rates will apply after a product is sold.
- CIs are to publish product brochures for each product it offers, rather than one generalised and ambiguous brochure
While the Council welcomes the revised Banking Supervision Policy by the RBF, it is disappointing that the policy does not apply to credit providers not covered by the RBF. Credit providers like Carpenters Finance, Dominion Finance, Pacific Finance Corporation Ltd and even hire purchase providers like Courts do not come under the RBF’s ambit of licensed credit institutions (LCIs).
The Council has previously raised concerns that these credit providers are operating freely without being subject to any regulatory controls unlike those that comes under the ambit of RBF. The absence of supervision and regulations is denying consumers their rights to disclosure and information.
The majority of ordinary consumers acquire credit services from these non-LCIs, and it is crucial that they be subject to disclosure policies such as those imposed on LCIs. Most of the complaints against credit providers received by the Council are against the non-LCIs. Apart from not being under effective supervision and regulation the non-LCIs also have unfair advantage over licensed credit institutions that have to bear the costs of regulation.
The Council is of the view that the Banking Act needs to be reviewed and that any company that is in the business of providing credit (excluding licensed moneylenders) to be a licensed credit institution that should come under RBF’s regulatory supervision.