The Franak NGO on Tuesday welcomed a set of bill regulating the work of agencies for the purchase and collection of debts, but also assessed that the proposal is insufficient, among other things, because it does not apply to non-housing consumer loans exceeding €132,722.

We certainly welcome the new regulation, but note that it is not sufficient and will have to be further improved if the government really wants to make significant progress, the association announced, noting that they will present their objections and suggestions during the public consultation.

They specifically addressed the part that refers to banks and the sale of debt to agencies concerning  non-performing loans where, they say, it is about loans from debtors whose contracts have been terminated due to non-payment of debt obligations.

The NGO cites the fact that the set of bills does not apply to consumer loans that are not housing, and exceed the amount of €132,722 euros, as the fundamental shortcomings of the proposed legislation.

“It is completely unacceptable that the new laws do not fully apply to, for example, consumer mortgage loans above €132,722, because these loans are also consumer loans, but the Law on Consumer Loans does not apply to them, and the provisions on consumer loans in the basic new law for agencies is not sufficient for everything that needs to be prescribed,” the NGO pointed out.

Also, according to Franak, the regulation does not contain an important provision on the method of debt repayment for consumers, so that the principal is paid off first, and only then the late interest.

Minister outlines set of bills regulating factoring and debt collection

On 27 July, Finance Minister Marko Primorac presented the set of bills regulating factoring, debt collection and better supervision of debt collection agencies with the aim of improving the protection of consumers.

The package includes draft amendments to the Act on Consumer Housing Loans and to the Act on Consumer Loans as well as a draft bill on models and terms and conditions for the servicing and sale of receivables and debt collection.

The draft set was put to public consultation that will last until 26 August so that in mid-September the government can table it in the parliament.

The new legislation will regulate the sale of non-performing loans to debt collection agencies, and receivables sold by telecoms and utility companies.

The set of these laws is supposed to improve the protection of debtors before the sale of their debts as well as after the sale.

The supervision of agencies that buy those debts will be introduced.

In the period prior to the sale of their debts, debtors will be offered additional measures to facilitate the debt service.

Partial or full refinancing of the debt is envisaged, with the prolongation of the payment of the debt and change of the type of loans, postponement of payment of installments for a certain period, partial write-off, conversion of currencies, debt consolidation etc.

Creditors (for instance, banks), will not be obliged to offer all those measures in a bid to facilitate the repayment, however, they will be supposed to offer any of these measures and to show evidence that they have tried to solve the problem with debtors before the debt sale, Primorac said.

Upon the sale, debtors should be informed about the developments, the minister said, underlining communication with debtors as an essential element.