SOME hire-purchase providers cannot charge compound interest as they are doing now, says the Consumer Council of Fiji.
Chief executive officer Premila Kumar said the provisions of the Consumer Credit Act maintained that interest charged be on the actual outstanding credit, calculated on a daily basis. Any deviation from this would be contrary to law.
"Even if minister has not stipulated maximum annual percentage rate, the hire-purchase company cannot charge compound interest as they are doing now. Interest should be charged on reducing balance," she said.
Her comments follow the release of a report prepared by an independent consultant on the hire-purchase industry. Mrs Kumar said the council commissioned the report and did not want to influence the outcome.
"We kept away from it," she said. The report was launched in Suva in recent weeks by Attorney General and Minister for Industry and Trade Aiyaz Sayed-Khaiyum.
The report, which gauges the strengths and weaknesses of the Consumer Credit Act was riddled with problems which was amended in 2006.
"Without testing the laws changes cannot be made. The council conducted this research to gauge the effectiveness of different provisions of the Act based on consumer complaints," Mrs Kumar said.