The sector of fast loans in our country is a “broken yard” for BGN 5.5 billion, who does whatever he wants under the nose of the state. That’s the main takeaway from a two-hour hearing on the subject before the Consumer Protection and Antitrust Subcommittee. The deputies were once again “shocked” from the impotence and inaction on the subject of the Consumer Protection Commission (CCP), which is the only body in the executive power with the authority to control those operating in our country 230 companies for easy money.
The deputies were outraged that despite the hundreds of court decisions on unfair clauses in contracts with consumers, fast loan companies continue to impose illegal texts on their new customers and no one can stop them. The imposed fines are only for BGN 743,000, which is 0.014% of the volume of loans granted by the sector – BGN 5.5 billion according to the latest data.
“There are many people who are literally enslaved by payday loan companies,” ombudsman Diana Kovacheva stated to the deputies.
Almost 10 years ago, with the “Kadiev” amendment, it was introduced by law annual percentage rate ceiling (APR) on consumer loans – no more than 5 times the amount of the legal interest on arrears (OLP + 10%), which to date makes not more than 69% annually.
However, companies for easy money charge dozens of types of illegal fees and penalties, which increase the amount of the obligation up to 2-3 times as soon as the contract is signed. Such are, for example, penalties for uninsured guarantors, unsecured bank guarantee, “guarantor” fee, fee for express consideration, for out-of-court debt collection, etc.
A huge problem is the declaration of the loan as early demandable, which with fast loans often happens not only in case of a partial delay of an installment, but even when leaving a job, filing another case against the debtor, etc., warns Maya Manolova, who from worked on the subject for years.
Subsequently, the heavy debt collection procedures further burden the debtor and sometimes the debt remains for the heirs.
Another problem is the methods of collection agencies, and also the fact that the future law that will regulate the activity of collection companies will not affect loans from fast money companies, only those from banks.
It is also a key topic that many of the quick loans are accumulated because of betting in gambling games, and there are cases of the same person who has problems with obligations being granted 9 quick loans, according to the data of the ombudsman Diana Kovacheva. Psychologists talk about a new type of addiction – to fast loans.
Against this background, the chairman of the KZP Stoil Alipiev demonstrated complete helplessness in his attempts to explain to MPs how the commission oversees the sector. It turned out that it did not have the capacity to check even the general terms and conditions of the companies, which were full of unfair clauses. Much less force them to be fixed. For this purpose, there are not enough lawyers and external consultants are used. Fines have been imposed in separate inspections, but they are null and void. Collective claims against companies from the sector are not conducted. Alipiev failed to explain even what percentage of the CCP’s prescriptions are fulfilled by the inspected persons. To an MP’s question, the head of the commission admitted that he had not informed his line minister of the economy about the problems in the sector.
“I am once again in shock from the CCP. It’s complete nonsense.” stated the chairman of the parliamentary subcommittee Desislava Trifonova from GERB.
Maya Manolova recommended strengthening the powers of the CPC, electing its members from the National Assembly, as well as creating a register of unfair clauses based on court decisions, so that texts that harm consumers cannot be multiplied and continue to be used in contracts with new clients.
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