Bulgaria’s Commission for Consumer Protection (CCP) said on September 26 that it found illegal provisions in the lending terms of all 25 banks that offer household loans on the Bulgarian market.
The biggest flaw, and a recurring gripe by bank customers for years, is that lenders can arbitrarily change the interest rates without any clear criteria, sometimes without taking into account market dynamics, the head of the commission, Vesselin Zlatev, told reporters.
Other routine infringements included the way interest was charged on late payments, demanding additional collateral for existing loans, as well as calling in loans early if payment on other contracts with the bank fell behind schedule (such as demanding full repayment of a mortgage if customers fell behind on payments for a consumer loan taken at the same bank).
Zlatev said that 21 lenders accepted the regulator’s recommendations and have already changed their general terms, another bank was re-doing the terms anew and three more asked for an extended deadline to implement the changes.
He said that banks had until October 10 to adhere to the commission’s recommendations; otherwise, the lenders risked being taken to court by the CCP.
In the first half of the year, the watchdog received 89 complaints from consumers (69 related to consumer loans and 20 on mortgages), more than for the entire 2011, when 84 consumers lodged complaints, the commission said in a statement on its website.
The most often encountered complaints were concerning the unilateral interest rate changes by the bank, failure to notify the customer of interest rate changes, confusing information in advertising materials, as well as problems with early repayment of consumer loans, CCP said.