Personal Property Securities Act

Consumers must read and understand the information provided by lenders before signing the credit contract.

Access to loans has been made easier with enactment of the Personal Property Securities Act (PPSA). The Act was passed by Parliament in 2017, but only came into effect in May this year.

The Act allows for consumers, micro, small and medium enterprises to offer their personal property in order to obtain finance. Previously, only real properties, namely house and land were considered by the banks as securities for loans. The new Act, however, allows consumers to submit other personal property as security.

The aim of the PPSA was to increase economic activity in previously untouched markets.

Through this, personal property such as livestock, crops, farm machinery, business equipment, vehicles, personal effects (such as electronics, computers, furniture, jewellery, watches, etc) attachments to buildings could be mortgaged to willing credit providers to raise funds to expand business or personal endeavours.

For instance, when a person borrows money from a bank and offers personal property such as a new car, the bank’s security over the car is personal property security interest.

Personal Property Securities Register

The Personal Property Security Register (PPSR) is the keystone of the PPSA and was launched the Reserve Bank of Fiji on May 31, 2019. It is an online register that is managed by the Reserve Bank.

Only those who register an account with RBF will be able to file their security interest.

However, anybody may search the Register to see if assets held by a person or business are subject to security interest.

What effect does this have for consumers?

Consumers may search the register before buying any personal property. By searching the PPSR, consumers will be able to find out whether the personal property they may be planning to buy has a security interest registered against it. Businesses can also improve the way they manage their credit risk by registering their security interest in goods they supply, lease, loan or hire purchase on the PPSR.

Consumer advice

Consumers are urged to weigh their options carefully before submitting any personal property as security for a loan. As a consumer you need to protect yourself against purchasing goods that could be repossessed by searching the PPSR. There is a 180-day transitional period provided by the PPSA to allow lenders to file their existing security interests and other information onto the PPSR. This will expire in November. Filing security interests by lenders and searching the PPSR will be free for the first two years however, this arrangement will be reviewed subsequently. Before taking loans and providing personal property as security, consumers must consider the following: Consumers must know how much money you want to borrow; and

Obtain a Pre-Contractual Disclosure statement from all banks. This statement will give important information such as:

The true cost of credit, called the Annual Percentage Rate (APR), how it is calculated and the total interest to be paid;

The amount for each repayment, when it is due, and what it is made up of (loan, interest, administration charge);

The process that comes into effect if you default; All types of Fees and Charges related to the loan you are applying, NOT just the general fees and charges

Consumers can use this information to then decide which bank to borrow from. It is important that consumers compare interest rates and other fees and charges before making a decision.

Read Before You Sign

Consumers must read and understand the information provided by lenders before signing the credit contract. They are also urged to ask questions if you in doubt or seek financial/legal advice to understand the contract. In practice, lenders often only give consumers this information just before they give the agreement to sign. It is important to understand that consumers should not feel under pressure to sign an agreement if they have not had time to read the information and understood it. Consumers can always request to take the pre-contractual agreement home to read before returning to sign the agreement, finalising the loan.

Consumers in need of advice on personal property security loans are advised to contact the Consumer Council of Fiji via the National Consumer Helpline on toll-free number 155. Alternatively, they can email complaints@consumERSfiJI.ORG Source: Consumer Council of Fiji

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