Moneylending – A Concern for Fijian Consumers
April 1, 2017
We all need quick loans at one point or another. This is given the rising demands of living a decent and comfortable life in this day and age. There are times when we run real broke and we decide to take loan to remain afloat. And, many a times, we go for the easy and a quick way to secure loan. That is when money lenders come to our minds.
They are easy to find with very little or no paper work at all. Many who are financially stranded turn to moneylenders for easy cash. What may seem an easy transaction may not be what it seems as some money lenders do business without adhering to the law. They charge very high interest rates, and in some cases, some have charged as high as 20% interest rate per week.
While moneylending has boomed in the country, consumers are bearing the full brunt of injustice in this sector with problems ranging from illegal interest rates to unfair terms and conditions.
The Consumer Council of Fiji has received several complaints, most of which dealt with consumers being hoodwinked with exorbitant interest rates. In few cases, the interest rates were changed in the middle of the contractual arrangement without the knowledge of the borrower. There are also cases of unfair lending contract terms. The Council has also come across cases in which there are absolutely no paper work between the two parties.
We understand consumers need money to cater for their needs and wants. Failing to prioritize needs has resulted in many consumers falling into the vicious cycle of debt. If you are in this situation and do not know what to do, then you can learn from Sarah and Jourah’s case given below:
Sarah and Jourah are employed in the same company as John who also happens to be a registered moneylender. As John is most popular in his company for giving loans to staff, both Sarah and Jourah were two of his regular borrowers.
However, the two had different borrowing patterns. When giving loans, John did not provide a written borrowing agreement to the borrower(s) but merely required them to provide their ATM Card and PIN.
As both Sarah and Jourah had been borrowing from John since 2014, they realized that their account balances had been increasing despite regular repayments. They both lodged separate complaints with the Council.
During the investigations, the Council gathered that Sarah did not retain a proper record of the amounts borrowed and repaid by her. However, from the little information that she had, it could be estimated that she had borrowed approximately $3,710 and repaid about $5,690. Despite this, John had advised her that her account balance had been $5,440.
Jourah, on the other hand, had a record of all her dealings with John. She revealed that she had borrowed $5,590 and repaid $8,175. However, John had been adamant that Jourah owed him $2,040.
Given the complaints by Sarah and Jourah, the Council requested John to provide a statement of account for both the complainants. However, the matter compounded further by the fact that John too did not retain proper records of the borrowing. As a result, he was unable to provide proper records of the two borrowers.
John was found to be breaching the provisions of Moneylenders Act Cap 234. There was no written agreement signed between the parties. None was provided to the borrowers for their record. John did not issues any receipts for repayments being made. Moreover, he was charging the borrowers compound interest instead of 12% per annum.
Further to the above breaches, John also violated the Value Added Tax Decree that required records to be kept for a period of seven years.
Upon mediation, John agreed to refund Sarah $2,300 and $1,914.20 to Jourah.
Before borrowing from a moneylender, consumers must find out if the moneylender is registered or not. Consumers can do so by asking for the moneylenders’ license. Consumers should not provide their ATM cards to moneylenders as security for the loan. They must insist on a contract to be entered into. They should also avoid multiple borrowing from moneylenders as this will only lead them to more debt.
The Council is urging that moneylenders’ license should be taken away if they do not comply with the legislation.
The Council continues advising consumers on their rights and responsibilities. If consumers need Council’s assistance then they can visit our offices in Suva, Lautoka and Labasa or call our National Consumers Helpline on toll free number 155 for advice.