MANY consumers do not know how to use credit wisely and many credit providers are so highly knowledgeable that they use credit to their advantage, often unfairly, a review of the Consumer Credit Act stated.
Launched by the Attorney-General Aiyaz Sayed-Khaiyum yesterday, the Consumer Council of Fiji report said consequently credit providers often exploit consumers.
The report was prepared by Prof Ram Karan and funded by AusAID.
"Credit contracts come in various forms, such as hire-purchase agreements, loan and mortgage documents, consumer leases, guarantees and bills of sale, which are normally technical and legally binding documents," the review said.
"Such documents are often drafted in fine print with various terms and conditions that purport to give consumers rights and responsibilities.
"However, in reality, consumers do not fully comprehend the complex legalities within the documents that can be confusing and contradictory, particularly to the average consumer who lacks legal knowledge and understanding. Consequently, consumers fail to realise the serious implications and treat these agreements as mere paperwork to be completed for the transaction.
"Often bad or unfair market practices are encountered where certain terms and conditions in the credit contracts are drafted in such a manner that it dilutes the consumers' right to remedy, causing immense ambiguities and lack of protection in instances where there is a breach of contract by the credit provider."
The study found that the act and the regulations have made little difference and that they largely served to legitimise the practices that existed prior to the enactment of these legislations. The real problem seems to be that consumers are not motivated to protect their own interests until such time that they find themselves in trouble.
"In addition, the legislation is fraught with complicated finance terms, legal jargon and complex mathematical formulae. All these are apparently intended to enlighten, educate and empower the consumers.
"This research, however, has revealed that comprehending these is beyond the ability of average consumers, let alone using the legislation for the purpose of negotiating contracts with credit providers.
"In reality, consumers are normally given 'standard' contracts to sign, perhaps not much different from the practice that existed prior to the enactment of the Consumer Credit Act in 1999, Consumer Credit (Amendment) Act 2006 and Regulations in 2009."
* More in business tomorrow