Viet Nam lacks separate laws to regulate consumer credit services, while lending regulations generally applied for banks and financial firms have little impact on these activities. — Photo congluan.vn

The meeting was told that complaints related to consumer credit account for more than 80 percent of all complaints that the Ministry of Industry and Trade's authority records in the domestic banking and finance sector at present.

Trinh Anh Tuan, deputy head of the authority, said consumer credit is a service through which customers borrow money from certain companies for consumer purposes.

Compared with corporate credit, consumer credit is characterised as smaller loans given to a larger number of customers, with higher service costs and more risks.

Ho Tung Bach from the authority's consumer rights protection department said in Viet Nam, customers usually seek consumer credit to buy items such as motorbikes, TVs, refrigerators, computers and telephones.

Compared to banks, consumer credit service providing companies disburse money quickly with almost no tight requirements about the verification of customers' demands and financial situation.

Many financial firms currently agree to give customer unsecured loans within only 10 to 15 minutes, he said.

Thus, along with the rapid growth of consumer credit, many firms harm customers with intentional deeds, Bach said.

Typical actions are: providing insufficient and confusing terms of transaction to customers, cheating customers about interest rates, and imposing unreasonable charges for customers in case they infringe contracts.

Some firms threaten customers and their relatives, and endanger their prestige while trying to reclaim debts.

Dinh Thi Thanh Nhan from the Ha Noi University of Commerce said Viet Nam lacks separate laws to regulate consumer credit services, while lending regulations generally applied for banks and financial firms have little impact on these activities.

The Civil Code 2015 stipulates a ceiling interest rate for consumer lending at 20 per cent per year. But many companies are advertising the service with rates of between 20 per cent and 30 per cent.

Many firms even ignore the ceiling rate while making contracts and set rates of up to 60 per cent, and occasionally even over 80 per cent, according to Nhan.

"Disputes, although emerging over small-value contracts, often cause serious consequences for customers' finance, health and honour," said Trinh Anh Tuan, deputy director of the Viet Nam Competition Authority.

"They also negatively affect the consumer credit market, which needs sustained development," he told Phap Luat Viet Nam (Viet Nam Law) online newspaper.

Experts said the authorities must build a legal framework to boost transparency in consumer credit operations, and customers should improve their knowledge to use the services more "cleverly and responsibly".

Phan The Thang from the customer rights protection department suggested that customers should study consumer credit services of banks before considering similar services of financial companies.

Phap Luat Viet Nam reported that consumer loans in Viet Nam totalled US$10.4 billion, equivalent to 6.6 per cent of the country's gross domestic product, as of August 2015.

The State Bank of Viet Nam reportedly said that consumer loans grew on average by 20 per cent per year over the last seven years, and around 15.8 million people are now potential customers of consumer credit providing companies. — VNS