Some 7M Romanian Lending Contracts To Undergo EU Imposed Amendments

Cerbulescu explained that banks sent a great deal of suggestions and addendums, which are currently being analyzed, and starting Tuesday there will be initial talks with the Romanian Banks Association on the draft emergency ordinance aiming to implement in local legislation EU directive 2008/48, which becomes compulsory for all member states come June 11.

Mihai Meiu, director within the consumer protection authority, said the member states are at liberty to include other provisions in local legislation, on the non-harmonized segment of the legislation, adding the widening of the provisions to include contracts that are already unfolding has been achieved, since over 90% of lending contracts are already in the portfolios of banks.

"Banks have 90 days to amend the lending contracts currently unfolding. The decision was to apply the current conditions to the unfolding contracts, even if said contracts were amended throughout their unfolding," Meiu said, adding that, if the consumer refuses to sign the new contracts, then tacit agreement is considered, but only concerning the legally required amendments to the contract, and not the additional provisions included in the contract initially proposed for signature.

Also, Meiu said the consumer protection authority can only regulate lender - individual relations.

Romanian banks will amend by September almost all lending contracts concluded with individuals, in order to make these contracts compliant with EU regulations. Furthermore, banks will not longer be able to collect fees on the early repayment of loans with variable interest, while for other types of loans the repayment fees are limited to 1%.

The draft emergency ordinance targets all lending contracts, including mortgage and real estate loans, regardless of the overall value of the loan, as well as leasing contracts, which will use most of the conditions currently imposed by local legislation for consumer loans.

The normative act will also regulate information offered to consumers in pre-signing stages. Also, regulation targets aspects referring to interest rates and fees, as well as the calculation formula for the annual interest.

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