Bulgarian MPs Pass Consumer Credit Act Amendments

Banks will no longer charge fees for the utilization and management of consumer loans, after Bulgarian lawmakers adopted on second reading amendments to the Consumer Credit Act.

Under the changes, creditors are prohibited from collecting more than a on-time fee and/or commission for the same service. The type, amount and service for which fees and/or commissions are collected must be clearly defined in the consumer credit contract.

The main objective of the Consumer Credit Act amendments which were put forth by Yordan Tsonev, MP from liberal party Movement for Rights and Freedoms (DPS) and Rumen Gechev, MP from the Bulgarian Socialist Party (BSP) is to ensure clarity and equality between the creditor and the borrower.

MPs adopted a text according to which credit contracts must be signed in written form, in a clear and understandable manner, as all elements of the contract are submitted in the same type, format and font size 12 or bigger in two copies.

Unilateral changes of the total cost of the consumer credit shall be permitted when the credit contract provides for the increase and the reduction of the total cost of the loan, the circumstances applicable to the changes in the total cost of the loan are described in the contract, and are objectively motivated and do not depend on the will of the creditor. Any agreement contrary to the conditions or avoiding them is void, the amendments to the Consumer Credit Act stipulates.

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