Call for review of Fiji's money lending laws

There are calls for a review of Fiji's money lending laws. The call was made by the Fiji Chamber of Commerce after an earlier comment by the Fiji Retailers Association about an increase in businesses resorting to money lenders, who charge astronomically high interest rates, to help with their urgent cash flow needs.

In the meantime, the Consumer Council of Fiji has called for tenders for a study of the effectiveness of the Fiji Money Lenders Act. The tender has closed and the outcome awaited.

The review of the money lenders legislation is aimed at making it more current and in line with developments in technology and the business of money lending.

Earlier, the Fiji Retailers Association said many businesses were going to moneylenders to meet their urgent cash flow needs.

Conclusions/lessons from ANZ and Westpac's financial results

In our earlier post, we analysed the financial results that were reported in the last few days by ANZ Banking Group Limited and Westpac Banking Corporation for their financial year ended 30 September 2006.

In this post, we outline the conclusions/lessons that can be drawn including a few things that can be pursued by the authorities :

1. RBF's monetary policy to be revisited. Its interest rate hikes has resulted directly in the banks gaining, albeit at the cost of consumers who pay higher interest rates for basic necessities including a roof over their heads. The RBF's reasons for its hikes were to contain consumption and to protect foreign reserves. As one plainly understands, it has contributed more to financial hardships for ordinary citizens under current economic conditions. The same foreign reserves it wishes to protect will be further depleted when these two banks remit their entire profits of over F$73 million to their head offices abroad as is their usual practice being branch banks.
2. There should be scope either for reduction of lending rates by banks or for raising deposit rates further. On both accounts, the economy stands to gain as a reduction in interest rates will help individuals who are facing financial difficulties as well as investors who wish to get domestic financing for some of their projects . An increase in deposit rates would help promote savings and investment and encourage investors from offshore to come in - boosting foreign reserves.
3. The Reserve Bank of Fiji to conduct and publish a study of interest rate margins and spreads to see whether these should be regulated. From the two banks financial results, one can only deduce that these margins are widening, which is something that consumers do not benefit from.
4. In an interest rate rising environment, there might be scope for banks to come down on its fees and charges as it makes more of its profits from the rise in interest rates.
5. There might be an urgent need for a banking ombudsman to attend to complaints and observations about the banking industry.
6. The Commerce Commission and the Consumer Council may need to come in and review whether consumers are really being disadvantaged under the current monetary policy settings and economic conditions.

We hope that the authorities will look into these.