In Bulgaria, the first banks that mislead customers with unfair information have already been sanctioned. Masses of the most important information are noted in the small print. Not to mention the numerous billboards that promise customers low interest rates but withhold the information that these are only valid for a certain period of time. The battle for citizens' deposits is coming to a head, especially in times of crisis, prompting banks to use all kinds of marketing tricks. This is one of the reasons why the number of complaints about financial services received by the Consumer Protection Commission is increasing. This year alone, their number already stands at 60, compared to a total of 68 for the entire previous year. Despite all this, the number of complaints about financial services is relatively low compared to the number of advertisements in the goods and services sector.
According to the Consumer Protection Commission, many customers fail to read the fine print when taking out a loan. This is confirmed by the results of an Internet survey on financial services in Bulgaria. More than half of respondents did not know what APR meant. Nor were they aware that they can exercise their right of withdrawal up to 14 days after signing the loan agreement, without having to give reasons for doing so. Due to clauses to the detriment of consumers, the consumer protection commission wants to file a collective action against a bank. The issue is that borrowers of mortgage loans are not notified of the increase in interest rates, thus eliminating the possibility of a review and their debt to the bank continues to rise. Vesselin Zlatev, head of the Consumer Protection Commission, gives another example:
"If a consumer defaults on one or two installments, the bank charges him interest on the entire remaining debt – explains Vesselin Zlatev. – If, for example, I have a loan with a 60-month term with the 31. and 32. If I default on the first installment, I will have to pay interest on the remaining 28 or 29 monthly installments, which are not due at that time. Their maturity occurs, for example, only after the third or fourth year. However, it turns out that in this case, the banks don't care about the economic interests of the borrowers. It is perfectly normal for us as borrowers to have the right to be informed of our monthly payment obligations if, for example, they exceed our calculated repayment amount by 2, 3 or 4 percent. In a normal economy, this kind of communication on the part of banks is immoral."
The outrage of the head of the Consumer Protection Commission is justified, as in the rest of the EU countries such problems have long been solved. This, according to Vesselin Zlatev, is due to both the consumer culture and the banking culture in these countries. However, the same financial institutions also operate in Bulgaria. Why do the banks at home and abroad go two ways??
"Obviously, this is due to the specific policy of the bank, which has its headquarters, for example, in Austria or in Germany – says Vesselin Zlatev. – Potentially, the management of our banks is subject to the instructions of the parent banks, which hold more than 50 percent of the shares. There may be certain omissions in our legislation that need to be corrected, as amendments to the law are not there to formulate plans and wishes, but must guarantee the rights of consumers."
"The fact that there are significant differences between the interest rates of banks at their headquarters in the motherland and in Bulgaria is a sign that part of their credit resources is in fact going to the Deposit Insurance Fund of the Bulgarian Central Bank," says the head of the Consumer Protection Commission Veselin Zlatev furthermore. "Some portion certainly flows back to the parent banks in one form or another, possibly as a profit."