Gov't proposes amendments to Consumer Credit Act

The Croatian government on Thursday sent to parliament draft amendments to the Consumer Credit Act in a bid to reinforce consumer protection in the case of bank customers.

Outlining the draft amendments, Finance Minister Slavko Linic said that changes were necessary due to the fact that 300,000 privately owned bank accounts were currently blocked and that the proportion of non-performing housing loans rose to 12.5%.

Under the government's proposal, charges for loan approval must be tied with real costs in the process of greenlighting the lending and the new legislation will prevent the imposition of any additional charges after the conclusion of the loan contract.

Commercial banks will be obliged to inform customers in written form about risks in connection with changes in exchange rates and in interest rates.

The draft amendments also define parameters for changing interest rates.

The government proposed that the upper limit for interest rates in the case of housing loans may not exceed the average interest rate on the approved housing loans increased by one third, while the upper limit for other consumer loans' interest rates may not exceed the average interest rate increased by half.

The new legislation also regulates arranged overdrafts on current accounts, so that the banks will be obliged to inform 30 days in advance their customers of decisions to reduce or abolish such overdrafts.

Banks will be expected to enable customers to cover the amount for which their overdrafts are reduced or abolished by 12-month installments with no additional fees to be paid to banks.

Linic said that a large portion of the proposed amendments was agreed with commercial banks as those changes would also facilitate banks' efforts to reduce their losses.

Prime Minister Zoran Milanovic said that recent meetings between government officials and bankers had been held in order to discuss the proposed amendments to the Consumer Credit Act and that they had not been connected in any way with the Commercial Court ruling in favour of a group of loan-holders who sued eight commercial banks over the Swiss franc-pegged loans.

He also called on citizens to be careful when borrowing because the state and regulations could not totally protect them in their contractual relations with lending institutions.

(Hina)



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