Consumers’ Right to Redress in Financial Services
Remarks by Chief Executive Officer - Ms. Premila Kumar
7 December 2015, Tanoa Plaza Hotel, Suva
 The Chief Guest – Attorney-General and the Minister for Finance, Hon.
Aiyaz Sayed-Khaiyum
 Deputy Governor, the Reserve Bank of Fiji, Mr. Arif Ali
 President of Association of Banks in Fiji, Mr. Kevin McCarthy
 Chief Executive Officer of Fiji Commerce Commission – Mr. Bobby
Maharaj
 Senior Government Officials
 Private Sector Representatives
 Distinguished Guests
 Ladies and Gentlemen
Good morning to you all.
I welcome you all to this Open Forum on the theme “Consumers’ Right to Redress
in Financial Services”.
The purpose of this forum is to discuss the progress made so far by financial
institutions, policy makers and regulators to better protect consumers who take loan
or credit to improve their quality of life.
The Council has for many years campaigned for fairer financial services in Fiji. It
has continuously highlighted the need for regulatory reforms and the creation of an
effective redress system to address consumer grievances.
Consumers and businesses around the world face a range of problems in their
dealings with financial service providers, from irresponsible lending practices to
unfair contracts and charges, poor service delivery and advice given by bank staff or
the financial advisors.
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For four consecutive years (from 2010 to 2013) the Council celebrated World
Consumer Rights Day on financial services sector. The underlying reason for
choosing this sector was to expose how vulnerable consumers were in the credit
market where consumer credit is a significant industry in Fiji.
The financial sector is a target area because banking and credit have become such a
prerequisite for attaining economic prosperity in our society. For economic
prosperity consumers face a range of problems and challenges when they take credit
or loans. In many cases the service providers take advantage of weak laws and poor
enforcement. The persistence of injustice in this sector has resulted in Fijian
consumers losing their life’s savings, going bankrupt or remaining in heavy debt for
decades. It is about time consumer justice is seriously given the attention it deserves
in the financial sector.
In 2010 the theme was Our Money, Our Rights: Fighting for fair Financial
Services. We highlighted how the Financial Services sector was lagging behind in
customer care and the range of problems faced by consumers in Fiji.
In 2011 the theme was “Consumers for Fair Financial Services”. We launched the
campaign for safe and fair banking services in Fiji. A report on Banking Services in
Fiji: from Consumers’ Perspective was launched.
In 2012 the theme was “Our Home, Our Rights: Fighting for Transparency in
Mortgagee Sale. We highlighted policies and practices in mortgagee sale that
worked against consumers. Lack of transparency in the manner mortgagee sale was
conducted is of great concern.
In 2013 the theme was, “Consumer Justice Now: Call for Reforms”. We
highlighted consumer injustice in 6 key areas i.e. Hire purchase, Mortgagee Sale,
Data Bureau Operations, Insurance, Money lending and Consumer Credit Act where
we called for reform in the financial services
This is where we left. After dedicating four consecutive years towards financial
services, its time to stocktake reforms in policies and practices introduced by RBF,
MITT, financial institutions and Hire Purchase companies for better protection of
consumers in the financial services sector.
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Over the years, the Council worked with two donors, the European Union (EU) and
Australian Aid, to conduct several research and awareness raising program on
financial services sector.
In the last seven years, the Council published a number of reports on financial
services sector to show policies and practices that was not favourable to consumers.
Following reports were produced:

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Banking Services in Fiji
Hire Purchase Industry in Fiji
Money Lending services in Fiji
Review of Consumer Credit Act and Regulations
As per the various studies and research conducted by the Council, and our
involvement in complaints handling, there are quite a few issues which remain
unresolved. These are:

Out-dated legislation such as the Consumer Credit Act, Banking Act and
Moneylending Act.

Under the Consumer Credit Act, every inspector appointed under the National
and Trade Measurement Decree 1989 is deemed to be inspectors for the
Consumer Credit Act. This is the biggest drawback- how can technical people
who graduated in Science handle issues related to sophisticated financial
products. The Council strongly believes that they are incapable of enforcing
the Consumer Credit Act and this is where the industry gets away. Need
specific regulator for consumer financial services and not Weight and
Measures Inspectors because of increasingly complex nature of this sector.

The application of financial hardship clause in the law must be applied
consistently by lenders to assist borrowers experiencing difficulties in meeting
the repayments on their mortgage. Most borrowers receive very little
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information on relief that lenders offer when borrowers face financial
hardship.

Default notice - Default notice sent to borrowers when they miss a payment
should be improved with better and clearer information on options available
for restructure.

Tender process - The tender process called for mortgagee sale is still not
transparent. A home owner is not invited or involved when tenders are opened
and awarded.

Conflict of interest of lawyers – In mortgagee sale, lawyers are appointed by
the bank but paid by the borrower. If a lawyer is on the financial institution
panel than the lawyers tend to protect the interests of the financial institutions
to remain on their panel of solicitors. Longer period for settlement means
more interest earnings for the banks which chews into consumers settlement
amount.
 The Council's research report on “The Hire Purchase Industry in Fiji”
unveiled unethical practices in the Hire Purchase sector as well:
o HP companies have been profiteering for decades through the illegal
calculation and application of interest rates. Instead of calculating interest
on daily reducing balance, HP companies calculate interest for the entire
duration of the credit contract on the basis of the full sum of credit taken
(compound interest applied).
o By using Rule of 78, the hire-purchase company collects bulk of the loan's
interest in the earlier periods of the loan term. It unfairly penalises
consumers if they pay the debt any earlier than the expiry of the full term
of the credit contract. The earlier the debt is paid, the heavier the penalty is
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imposed on the early payments which benefit the hire-purchase company
generously.
o No regulation of resale of repossessed products. The repossessed items are
sold at a very low price where depreciation value is shocking. The hirer is
unaware of the actual price his/her repossessed good was sold at and who
the new buyer is. No evidence or disclosure on the resale is shown or given
to consumers to verify the facts. Consumers are often informed that the
resale value was much lower.
o Moreover, a major issue relating to the terms and conditions in credit
contracts is that they are in fine print and dull lettering. An assessment of
the actual conditions in the leading HP dealers shows that the font size
used is possibly Times New Roman 8 pts or Arial 7 pts.
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Many credit providers are not under the regulatory control of the RBF or any
other regulator to oversee their operations. For example: There are nondeposit taking institutions that are largely unregulated. It’s hard to belief that
well established companies like Carpenters Finance, Handy Finance,
Dominion Finance Ltd, Pacific Finance is not under regulators radar.
The country’s Central Bank did establish the Complaints Management Forum,
however the Forum is not effective and calls have been made to review the
effectiveness of Complaints Management Forum. Now 4 meetings has been
reduced to two and in 2015… only one meeting was held.

Lack of Effective Redress –No penalties against financial service providers
who have engaged in unfair or unscrupulous practices.

Loan officers and other people employed by financial institutions are often the
principal source of information and advice for consumers. Consumers place a
high degree of trust in these individuals who are deemed to be experts in this
field. However, consumers often do not get the appropriate advice on financial
services resulting in purchasing of inappropriate products. So why Financial
advisors are not made accountable?
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
A lot more work is required in the area of financial education for consumers
because financial products are complex and the consumers can easily fall
victim to their trusting financial advisor who are on the payroll of the financial
institution or receive commissions.
I am sure we will get to hear a lot from the panelists here on what reforms they have
introduced or they intend to introduce to deal with issues of irresponsible lending
and disclosures.
Ladies and Gentleman, I now take the pleasure of introducing our Chief Guest.
Our Chief Guest needs no introduction. We all know Hon Aiyaz Sayed-Khaiyum is
the Attorney-General and the Minister for Finance, Public Enterprises, Public
Service and Communications.
Prior to his appointment as a Cabinet Minister following election in September
2014, Hon Sayed-Khaiyum was the Attorney-General and the Minister for Justice,
Anti-Corruption, Public Enterprises, Communications, Civil Aviation, Tourism,
Industry and Trade and the Minister responsible for Elections under the
Bainimarama Government.
Under his leadership, we have seen a number of reforms such as;
 Modernizing Fiji’s laws by introducing decrees in such areas as domestic
violence, corporate governance and criminal code.
 Oversaw the formation of Fiji’s Independent Commission against Corruption,
the first of its kind in the country and in the region.
 Led the preparations for the return to parliamentary democracy by
implementing a new system of electronic voter registration (EVR),
implementing Fiji’s new political party and electoral laws, and coordinating
international aid and assistance for the polls.
 Oversaw the work to finalise the Fijian Constitution.
 A leading proponent of forging public-private partnerships in a number of
key sectors – including roads, ports, State Owned Enterprises and the
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mahogany industry – as the best way to deliver quality, value, investment, job
creation and transparency.
 Launched the Fijian Made and Buy Fijian Campaign to support Fijian
businesses and promote Fijian products.
 As the Minister for Communications, Hon Sayed-Khaiyum liberalised the
telecommunications industry in Fiji, increasing access to mobile services,
extending coverage to 95% of the country, and making mobile connectivity
more affordable.
 Minister attended Marist Brothers High School.
 He obtained his Bachelor of Laws (LLB) degree at the University of New
South Wales (Sydney), Australia and Bachelor of Arts (BA) majoring in
Political Science and Development Studies degree from the Australian
National University in Canberra, Australia.
 He completed his Masters in Law degree at the University of Hong Kong. He
also holds a Graduate Diploma in Legal Practice from the University of
Wollongong in Australia.
 He also completed a six-month internship at the Australian Federal Parliament
with a former Minister for Aboriginal Affairs.
 Hon. Minister is admitted to the Supreme Court of New South Wales and to
the High Courts of Australia and Fiji.
 Prior to his acceptance of the position of the Attorney-General, he was the
General Manager, Group Legal & Compliance and Company Secretary of the
Colonial Group of Companies in Suva, Fiji.
 Besides working as a Senior Legal Officer at the Director of Public
Prosecutions Office in Suva, Fiji, Hon Sayed-Khaiyum has also practiced law
with Minter Ellison Lawyers in Sydney, Australia.
Ladies and gentlemen please welcome our Chief Guest Hon. Aiyaz Saiyed
Khaiyum.
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