Constitutional Court strikes down three draft bill package capping interest on mortgage loans and amounts to be collected by debt collection agencies
On 13 March 2019, the Constitutional Court of Romania admitted the objections raised regarding the constitutional control procedures in relation to certain enactments with a significant impact on the financial market of Romania.
This legislative package voted for in the Romanian Parliament would seriously affect lending activity and the process of recovering claims if it had entered into law, but it was challenged by a group of deputies just before it was published.
The three draft bills included:
1. Legislative project no. 84/2018, under which it was proposed that the annual effective interest rate could not exceed 3% in the case of mortgage loans and that the interest rate for consumer loans might be up to a maximum of 18%;
2. Legislative project no. 85/2018, under which it was proposed that an assignee could not claim from an assigned debtor who is an individual person (i.e. consumer), more than double the amount paid by it to buy the debt from the assignor; and
3. Legislative project no. 164/2018, under which leasing agreements where the user is an individual would no longer be enforceable titles. Moreover, this enactment provided the implementation of a new set of rules on the restitution of the leased asset, and also in relation to the payment of outstanding amounts in cases where the leasing instalments are not paid by the respective individual for more than 3 (three) consecutive months.
The Constitutional Court was unanimous in admitting the constitutional objections raised regarding the above enactments, and will further issue a formal decision which will be published in the Romanian Official Gazette.
The decision adopted by the Constitutional Court is definitive and binding, meaning the Romanian Parliament is now obliged to reconsider these enactments in order to reconcile them with the decision of Constitutional Court.
This document provides a general summary only and is not, nor is it intended to be, comprehensive nor does it constitute legal advice. Specific legal advice should always be sought regarding the particular facts of a given situation.