The companies that collect the non-performing loans of the banks will no longer be able to stick notices of the debtors in the entrances to the blocks, visit the homes of the debtors, nor the workplace, as well as call the employers of the debtors, writes “Now”.
Collection companies will have to communicate only through telephone calls or messages in written and electronic form, addressed personally to the debtor. In addition, they are obliged to comply with the requirements of the Personal Data Protection Act.
This envisages a completely new Law on credit servicers and credit buyers, which the deputies voted for in the first reading today in the plenary hall. It introduces stricter control over companies involved in the collection of non-performing bank loans, as they will now have to be licensed in the BNB.
However, the law does not deal with problematic fast loans, where the arbitrariness of debt collectors is most often encountered.
Anyone will be able to buy non-performing loans
Everyone will now be able to buy non-performing loans from the banks, but not everyone will be able to collect them from the debtors, the new law also provides.
According to him, the circle of individuals – individuals and legal entities – who can buy non-performing loans from the banks, without even being subject to any registration with the BNB, is expanding. However, these buyers may entrust the collection of debts only to companies specially licensed by the BNB, and there will already be bank supervision over their activities.
Currently, these two activities – buying non-performing bank loans and collecting them from debtors – are carried out by the so-called collection companies that are only subject to a registration regime with the BNB. They will have to be licensed if they want to continue operating.
The law sets two goals, according to the petitioners from the Ministry of Finance. One is to introduce the EU directive to unify measures and rules to solve the problem of high levels of non-performing loans in the EU and prevent their future accumulation. By widening the circle of persons who can buy the non-performing loans of the banks, the aim is to give a boost to the secondary market of bad loans, instead of them weighing down the financial institutions.
The other goal is to increase protections for debtors from harassment and fraud by tightening controls on debt collectors. The practice abounds with all kinds of arbitrariness over debtors. Once sold to collection firms, bad debts often end up saddled with new fees and additional interest and become even more difficult to collect. In addition, it is common practice for debt collectors to deceive debtors and pressure them to pay debts that are overdue.
Therefore, the law specifically states that bad credit buyers and the persons who will collect them from debtors are prohibited from providing misleading information. They are obliged to clearly and precisely inform the debtor that they have acquired his obligation, and its amount cannot be greater than what the debtor should have returned to the bank. In addition, the penalty interest for late payment cannot be higher than the statutory interest, which is the APR plus 10%.
Debt buyers and collectors are required “to respect and protect the privacy of borrowers, and to apply rules of ethical behavior and communication with them.”
The application of aggressive commercial practices is prohibited – for example, pasting notices in the entrances to the blocks where the duties become known to all, visiting their homes or workplaces, calling their employer.
Supervision by BNB and KZP
In addition to the BNB, the Consumer Protection Commission will also supervise buyers and debt collectors. Debtors who believe they are being harassed will be able to appeal to the KZP, and it can submit a reasoned request to the central bank to revoke the license of companies with many offenses.
On this occasion, “Vazrazhdane” expressed doubts that KZP has the capacity to cope with these new responsibilities.
A reaction
In fact, “Vazrazhdane” was the only political force in the parliament that expressed objections to the law and stated that it would propose several amendments for its second reading. According to Dimo Drenchev, the collection companies have been working in the country for many years and have not caused any problems, therefore it was not necessary to switch to a licensing regime – the requirement for 1 million BGN capital was a sufficient guarantee. He admitted that the new restrictions are being pushed to make way for one or a few big international companies to enter our market and more easily impose themselves on it.
At the moment, there are 49 companies for collecting loans and other obligations, and they will have to pay BGN 35,000 for a license, Drenchev pointed out. He also spoke out against the envisaged possibility for the KZP to submit a reasoned claim to the BNB for the revocation of a loan collection company’s license, without the right to object. “There should be such an opportunity only if there is enforced enforcement,” said Drenchev.
“Vazrazhdane” is skeptical that opening the possibility for everyone to buy non-performing bank loans will lead to the development of the secondary market of non-performing loans. If the collection companies do not take them for collection against a commission, these debts will become unsellable, believes Georgi Ivanov. According to him, the new regulations only aim to make it easy for banks to get rid of bad loans.
The law was voted on in the first reading almost unanimously, with only ITN and several independent deputies voting “abstentions”.
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