FINES OF 337,000 LEI, FOR ABUSIVE CLAUSES IN LENDING CONTRACTS The ANPC has revealed the deceitful practices of Non-banking Financial Companies

The non-banking financial institutions have been fined a total of 337,000 lei, following the audit conducted by the National Consumer Protection Agency (ANPC), between May 8th, 2017 - June 16th, 2017, according to a report of the ANPC, published by the Parakletos Association.

The watchdog revealed the abusive terms of the NBFC lenders and the illegalities committed by these companies.

Aside from fines, the ANPC has issued warnings, has requested the remedy of the shortcomings, as well as putting and end to the incorrect commercial practices.

Also, the ANPC has asked some NBFCs to repay to the borrowers the amounts that they had collected without any legal basis.

The ANPC also ruled the freezing of the advertising campaigns of NBFCs until their compliance with the law.

The authority has audited the loan agreements, with or without a mortgage, concluded by the non-banking financial companies between February 01st, 2017 - May 05th, 2017.

The non-bank financial institutions which the ANPC audited and uncovered irregularities at include Provident Financial România, Easy Credit 2 All and Easy Credit 4 All, Ocean Credit or Legal Credit.

Irregularities concerning the advance repayment clause, at Easy Credit

The ANPC inspectors have also uncovered irregularities at Easy Credit, which the press recently wrote about and reported that it is managed by Ianfred Silberstein, former legal advisor and even legal executive at the NBR and current consultant of the NBR.

In a report on the abusive interest rates and clauses practiced by NBFCs, Antena 3 presented the statement of Mr. Silberstein that he is not in a conflict of interest, even though he is the head of an institution that is overseen by the NBR.

Mr. Silberstein claims that he is not an employee of the NBR, which is why he doesn't think the connection of their company with the IFNs can represent a source of conflict of interest.

Silberstein claims that people don't get informed and sign things too easily and superficially, without reading contracts in advance, which is why they don't find out about those clauses that could prove disadvantageous for them later.

Lawyer Gheorghe Piperea wrote on Facebook, that the conflict of interest is involved in "blatant and can be seen from space": "Not only is a consultant or advisor of the NBR is an employee of the NBR (or similar), because he is getting a (significant) compensation from the NBR and has positions in most all of the institutions shepherded by the NBR, but Mr. Silberstein is still the president of the Association of Banking Legal Advisors, organizer of one or more banking law seminars. The latest (and probably last) banking law seminar held for judges and prosecutors was organized and held in April at the Romanian Banking Institute under the patronage of Mr. Silberstein.

In that seminar, (...) it was said, among other things, that the big issue of the banking system was not the criminal, deceitful and abusive of the practices and behavior of the bankers, but the low level of consumer education. (...) Mr. Silberstein said that, in the A3 report, that there is nothing wrong with a penalty interest rate of 0.5% per day of delay as long as the debtor did not open their eyes when they signed the agreement. Like Manole the builder said (ed. note: according to the press, the NBR governor Mugur Isărescu delivered reports, under the code name Manole, as an informant to the former political police, prior to 1989) - a contract is a contract, right? The suckers, the naïve should pay, as they're adults".

Dan Suciu, the spokesperson of the NBR, told us, on Friday, that Ianfred Silberstein has no longer been on the payroll of the NBR since 2015, but he sometimes serves as a consultant on projects.

In the same Antena 3 report, Dan Suciu is saying that NBR can't intervene against the interest rates and penalties of 80-7700% a year practiced by non-financial lenders, as they are "commercial" matters.

The ANPC has found that the Easy Credit 2 All and Easy Credit 4 All of Constanţa have violated the legal provisions concerning the early reimbursement of loans.

Article 40 of the Emergency Government Ordinance din OUG 52/2016 stipulates: "Consumers have the right, at any time, to fully or partially carry out the obligations that are theirs as part of loan agreement before its ending. In that case, the consumer has the right to a reduction of the total cost of the loan, with that reduction consisting of the interest rate and the costs pertaining to the amount repaid in advance for the period between the date of the early repayment and the date the loan agreement ends".

According to the ANPC, the customers of Easy Credit were expected to announce in writing to the company the intention of making an advance repayment, because otherwise, the lender might construe the depositing of those amounts as an intention of paying in advance the interest for a period of a maximum of half a year.

The ANPC report mentions: "The economic operator has expressed its willingness to notify all debtors engaged in similar ongoing contracts about the need to eliminate a written request in the case of advance partial repayments, within 15 days from the date of the communication of the present document".

Provident charged different commissions for the same service, according to the ANPC

The ANPC has issued a fine of 40,000 lei, in the case of Provident Financial România, amid the fact that the amount of the commission charged was different from one contract to the next, even though the service provided to the consumer was the same.

The ANPC report mentions: "It hereby clearly follows that these amounts did not represent a unified commission as defined by the law, as being a commission fee which has an identical value to all consumers, which requests from the professional an additional service, regardless of the type of financial product owned".

In the case of a complaint filed with the ANPC, a consumer signed three contracts on October 7th, 2016, on June 10th, 2016 and April 15th, 2016 thus meaning that three different prices were charged for that service, (910 lei, 1495,45 lei and 1190,77 lei), the report by the institution states.

Also, the loan application review fee and the single fee must be set as a fixed amount, as the same amount is charged to all consumers with the same type of loan at the same lender, the ANPC notes.

The report of the ANPC is sizeable, and irregularities have been uncovered at tens of non-bank lenders.

At Fast Finance IFN, the regulator found that its ads provided information which was misleading to consumers, namely information concerning the currency of the loan (the NBFC does not actually lend in Euros), and the duration of the loan is not 48 hours, but rather the period for the review of the granting decision.

According to the ANPC, Telecredit IFN SA advertises an interest rate of 1.2%, without mentioning whether it applies per day/week/month/year.

The ANPC inspectors found that the customers of TBI Credit IFN were also required to sign insurance policies. In the case of one specific loan agreement, an insurance policy of 1,167 lei was signed, of which only 262 would be paid to the insurer, while the rest represented a fee.

The ANPC states: "As it follows from the description above, consumers, in particular retirees and vulnerable individuals, without specialized knowledge, sign these agreements, and the employees of the professional - the NBFC - have every interest in convincing them to sign these insurance policies with the preferred insurer because almost 80% of the amount of the insurance, on which the consumer pays interest, represents the commission of the agent".

Parliamentarian Liviu Balint of the Chamber of Deputies, proposes the capping of the Annual Effective Interest rate for NBFCs that are charging absolutely ridiculous rates.

Liviu Balint said, according to ProTv: "We have to protect the consumers, because they end up losing their homes. There are 10-12 countries in Europe where there are such restrictions."

The legislative draft is going to be formulated after the parliamentary holiday.