The banks will be compelled not to introduce or increase the fees during the loan-repayment period, and if the bank increases the interest rate, the client can terminate the contract without paying an early repayment fee, under a draft law initiated by the National Authority for Consumers’ Protection (ANPC).
The draft law regulates the relation between the clients and banks and was prompted by the increasing number of relevant complaints recorded by ANPC (some 1,300 since the start of this year).
The draft law regulates the relation between the clients and banks and was prompted by the increasing number of relevant complaints recorded by ANPC (some 1,300 since the start of this year).
The ANCP officials say that in most cases the banks’ clients complained about the fact the banks modify the interest rates unilaterally without notifying them or without presenting the reason for the modification. Moreover, the fees are increased during the repayment period without notification or new fees are introduced. At the same time, the clients are displeased with some unjustified costs for the banking transactions.
“The principle the reform of the client-bank relation is based on is that each client should understand very clearly how the interest rate is modified, and what are the fees and the crediting conditions. The transparence level should be increased”, said on October 13 Dan Vlaicu, the president of ANPC. He says the new provisions may take effect as of 1 January 2009.
The draft law bans the introduction of the new fees or the increase in the existing ones during the loan-repayment period. In the pre-contract period, the bank must make available for the client the draft contract and a cost simulation.
“The modification of the loan’s interest rate has to be independent from the will of the bank,” reads the draft law. Thus, the interest rate of the loan will fluctuate only depending on the reference indicator – either interbank interest rates or the bank’s basic interest rate, explains the ANPC president.
“The modification of the loan’s interest rate has to be independent from the will of the bank,” reads the draft law. Thus, the interest rate of the loan will fluctuate only depending on the reference indicator – either interbank interest rates or the bank’s basic interest rate, explains the ANPC president.
Any contractual modification, inclusively the adjustment of the interest rates, will be banned without the signing of an additional document, namely without the client’s approval with the new crediting conditions.
“If the client does not agree, the contract can be terminated, inclusively through refinancing, without the payment of the early repayment fee,” says Vlaicu. The notifications regarding the modification to the contractual clauses will be sent to the clients at least 30 days before their application.
“If the client does not agree, the contract can be terminated, inclusively through refinancing, without the payment of the early repayment fee,” says Vlaicu. The notifications regarding the modification to the contractual clauses will be sent to the clients at least 30 days before their application.
The loan contract must contain a provision cautioning the client against outstanding installments.
If this happens, he/she will be reported to the Credit Bureau and the Central Office of Banking Risks. The loan contracts will include all the costs of the loan. The ANPC official mentioned the law is not retroactive but the market will settle this fact. “The banks will modify the existing contracts. If not, they will no longer be on the market”, said Vlaicu. In his opinion, the clients will take their business to other banks that offer them protection and transparency.
ANPC says the draft law has been discussed with the Romanian Association of Banks.
ANPC says the draft law has been discussed with the Romanian Association of Banks.
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