Bulgarian Central Bank, Watchdog Probed over ‘Fast Loans’
Bulgaria's Prosecutor's office has opened an inquiry into Bulgarian National Bank (BNB) and Commission for Consumers Protection (CCP) over complaints against fast loan companies.
The Supreme Cassation Prosecutor's office self-initiated the inquiry after a report by NOVA television on mistreatment of customers by fast loan companies. The report was aired on October 11.
Customer complaints against non-financial institutions providing fast loans have increased significantly, due to unfair terms of loan agreements in the non-banking credit sector.
Fast loan companies are subject to registration at the Bulgarian National Bank (BNB), while Commission for Consumers Protection (CCP) is responsible for protecting the rights of Bulgarian customers.
Bulgaria’s Supreme Cassation Prosecutor's office will check whether BNB and CCP implement consumer protection legislation over fast loan companies and how both regulatory bodies apply their power in order to eliminate unfair terms of loan agreements.
The Bulgarian Parliament recently announced its intention to put a 20% ceiling on the interest rates on fast loans, which are considered by customers to be extremely high at present.
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There's a small hole in that theory though - when most people get their monthly salary here they still have nothing in their pockets, so paying back a loan isn't really possible. If more interest accrues and the borrower still has nothing then it's the lender who has the choice of either breaking the legs of someone who then stands even less chance of being able to pay him back or going deservedly bust himself for getting into such a stupid business (and probably getting his own legs broken, if he's lucky, by the "businessmen" who funded him in the first place)
Same has happened in western Europe where high street shops have been replaced with credit companies - and I have noticed an increase in that here. The result has been a huge increase in 'payday loans' which means as soon as the customer gets his/her salary the whole amount must be given to the credit company to pay off the loan - and then more borrowed to get through the month. And since the interest rates are so high, it becomes impossible to repay the loans at which stage some gangster types start to come to your home or workplace to harass you.