Revised law to focus on responsible lending

October 13, 2016

by Manasa Kalouniviti

THE Ministry of Industry, Trade and Tourism yesterday started its first in a series of workshops which will be conducted on the review of the country’s Consumer Credit Act.

The ministry’s permanent secretary, Shaheen Ali said: “The revised legal framework should introduce responsible lending standards”.

He said this was where the credit provider made reasonable inquiries about a consumer’s financial situation, their requirements and objectives.

“Credit providers must take reasonable steps to verify the consumer’s financial situation and make assessments whether the credit contract is ‘not unsuitable’ for the consumer.

“Furthermore, it should mandate defined legal redress system to allow consumers clear recourse in the event their rights are breached in a credit contract,” he said.

Mr Ali said the workshop would focus on a number of key issues that included:

* coverage of the Act;

* provision of licensing or registration of credit providers;

* which agency would be the appropriate supervisor of the Act;

* what consumer recourse mechanisms need to be provided for under the Act;

* should all credit be treated the same;

* how to treat hire purchase agreements in the Act; and

* how to capture the informal credit sector — moneylenders and pawn brokers.

Mr Ali had earlier said the Consumer Credit Act provided the legal framework for the provision of credit and ensured that consumers or debtors were protected and allowed to make informed decision before entering into a credit contract.

“However, it has been noted that over the years a number of complaints have been received in relation to credit provision and the implementation of the Act has been difficult due to the onerous provisions of the Act.”

He said this was why the ministry saw the need to review the Act.

Meanwhile, the review of the legislation is being done by Rosamund Grady, a senior international consultant on Financial Inclusion Regulatory Design, who made a presentation on the objectives of the review, financial consumer protection, key findings and key recommendations during the workshop.

Mr Ali said the first draft of the revised Consumer Credit Act would be made available to all stakeholders for consultations in November.

Mr Ali said the revised Act needed to provide clear rules for the credit providers to allow for a fair and level playing field in the industry, which encouraged commerce and business.

“I call upon all the stakeholders here today to make constructive contribution to the discussions; your contributions today will enable Ms Grady to draft a revised law that is simple, balanced and inclusive.”

About 100 participants and stakeholders attended the first workshop at the Grand Pacific Hotel in Suva yesterday.

Source: Fiji Times