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Credit imbalance

The Consumer Council Of Fiji
Saturday, December 15, 2012

DO existing consumer credit laws really protect the consumers?

This question can be answered by those who have taken credit to improve their standard of living.

Based on consumer complaints it is safe to say that the Consumer Credit Act is a weak piece of law that needs to be overhauled.

The present Consumer Credit Act 1999, Consumer Credit (Amendment) Act 2006 and Consumer Credit Regulations 2009 have been implemented to provide for the rights and responsibilities of both the consumers and credit providers.

It would, therefore, appear that both parties have equal rights and responsibilities and both have equal resources and expertise to exercise their rights and honour their responsibilities.

In reality, however, the situation seems to be very different.

While the credit providers are normally very large corporations with resources to employ experts in finance and legal matters to deal with credit transactions, the average consumers have no such luxury.

Nevertheless, before signing any contract the consumer is reminded that if he/she has any concerns or doubts he/she has the right to seek legal advice or information from the Fiji Commerce Commission.

All the reminders to seek more information from consumer protection authorities and legal advice give the impression that the legislation empowers the consumers with their rights.

In reality, most consumers do not have the time to go to consumer protection authorities or have the money to get legal advice.

If they had the money they probably wouldn't buy on credit anyway.

If a consumer, for example, is buying a fridge for $1000, he or she is not likely to spend another $100 to get legal advice even if he or she can afford it. As can be seen, the requirement for consumers to seek information from consumer protection authorities and get legal advice serves not only to give a false sense of protection, but it can actually work against the interests of the consumers.

In the event of a dispute the credit provider can point to the written warning on the contract documents where the consumer was reminded of his/her right to seek further information and get legal advice.

If the consumer did not exercise this right then only the consumer is to be blamed. If the matter goes before the civil court, the consumer might not get the sympathy of the court either.

Credit business will undoubtedly continue to thrive in future.

Consumer credit has become so popular today that economies of most developed nations revolve around credit. Credit drives consumer spending and consumer spending drives the economy.

So consumer credit has a very big influence on keeping the economy lively.

To encourage production of goods and services, our economy needs consumers to spend.

Credit gives both the producers and the consumers the ability to do just that.

The problem, however, is that generally there is imbalance in knowledge and bargaining power between the two parties.

Many consumers do not know how to use credit wisely and many credit providers are highly knowledgeable as to how to use credit to their advantage, often unfairly.

To combat this escalating problem, a review of the consumer protection laws of Fiji has become crucial.

Appropriate authorities need to be established which can provide credit advice to the consumers and appropriate redress against disputes between the credit providers and consumers.

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