FIJI'S central bank says there is an urgent need for compliance and regulation of activities in the moneylending business.
In its response to the Consumer Council of Fiji's hire-purchase industry report, the Reserve Bank of Fiji said it was concerned with the extent to which moneylenders in Fiji charged exorbitant interest rates.
"The RBF is of the view that there is very little regulation and/or lack of compliance of activities of moneylenders and the exorbitant interest rates that they charge," the bank said.
The Money Lenders Act is administered by the Ministry of Justice. Questions were sent to the ministry yesterday.
"The Money Lenders Act stipulates a much smaller interest rate — about 12 per cent than what is charged.
"The other issue is if these moneylenders are legally registered," the bank said.
Meanwhile legislation governing the credit purchases in the country should be redrafted into layman's language for better understanding, the bank said.
"There is a need to critically examine the hire-purchase market in Fiji to determine the effectiveness of the Consumer Credit Act and to adequately protect vulnerable consumers.
"There is a need to simplify the terms and conditions of mortgage contracts and financial institutions should explain these terms and conditions to their customers," the bank said.
The bank said the hire-purchase and credit provider markets in Fiji were not at a level of cutthroat competition.
"There are only two major hire-purchase providers in Fiji. Competition will ensure that interest rates and customer service would benefit the consumers most.
"This does not seem to be reflected in the hire-purchase and credit market in Fiji," the RBF said.