Constitutional Court strikes down three draft bill package capping interest on mortgage loans and amounts to be collected by debt collection agencies
On March 13th, 2019, the Constitutional Court of Romania admitted the objections raised within the constitutional control procedures, in relation to certain enactments with a significant impact on the financial market from Romania.
This legislative package voted in the Romanian Parliament would seriously affect the lending activity and also the process of recovering claims if it had entered into force, but it has been challenged to Constitutional Court of Romania by a group of deputies just before the promulgation.
The three draft bills included:
1. Legislative project no. 84/2018, pursuant to which it was proposed that the annual effective interest rate could not exceed 3 percentage points in the case of the mortgage loans and that the interest rate for consumer loans might be up to a maximum 18%;
2. Legislative project no. 85/2018, pursuant to which it was proposed that the assignee could not claim from the 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, pursuant to which leasing agreements for cases in which the user is an individual person, are no longer enforceable titles. Moreover, this enactment provided the implementation of new set of rules on the restitution of the leased asset and also in relation to the payment of the outstanding amounts in case the leasing instalments are not paid by the respective individual person for more than 3 (three) consecutive months.
The Constitutional Court was unanimous in admitting the constitutional objections raised against the above enactments, and will further issue a formal decision which will be published with the Romanian Official Gazette.
The decision adopted by the Constitutional Court is definitive and binding, the Romanian Parliament having the obligation to reconsider these enactments in order to reconcile with the decision of Constitutional Court.