After the microcredit scandal, a legal initiative is filed in the Parliament

In early December, the Tirana Prosecution Office delegated to SPAK the file of what it considered a criminal organization for creating fraudulent microcredit schemes, which is accused of having extorted over 17 thousand Albanian citizens since 2015. According to the investigation, the above group is accused of having extorted at least 36.8 million euros and 1700 real estate properties from thousands of citizens, through the bad loan refinancing scheme and blackmail.

The microcredit scandal affected both the Bank of Albania and its governor, Gent Sejko, after a previous investigation by the Tirana Prosecutor's Office found that this institution was responsible for delayed or inadequate measures to curb this scheme.

While the investigations continue, a legal initiative has been filed in the Albanian Parliament that aims to regulate the relationship between consumers and financial institutions that offer consumer loans, as well as establish clear rules for consumer protection in the future.

The draft law on "Consumer Credit Agreements" is an initiative of Democratic Party MP Jorida Tabaku and aims to establish clear rules for the transparency of credit conditions and the obligation of service providers to inform consumers about all costs and their rights.

“This law aims to increase transparency, strengthen consumer rights and minimize abusive practices, creating a safer environment for obtaining microcredits,” Tabaku told BIRN.

The Democratic MP also mentions as innovations in the law the prohibition of marketing loans with deceptive content and the obligation to reassess the consumer's solvency before significant changes in the loan amount.

 

“These measures aim to establish a fair balance between the parties and prevent situations where consumers are financially overburdened,” adds Tabaku.

The initiative submitted by Tabaku to the Assembly is considered necessary even by economic experts, who believe it is valid even with the current microcredit scandal.

According to Zef Preçi, executive director of the Institute for Economic Studies, this initiative "represents the most serious attempt in the field of lawmaking to address one of the most serious problems of the functioning of bank lending and the microcredit crisis."

“The document is based on the relevant EU Directive and reflects the civic sensitivity towards the crisis that about 100 thousand Albanian families are going through over the last four to five years,” said Preçi. But, according to Preçi, the Parliament should debate the initiative and the usefulness of joining this legal initiative with the declared efforts of the Bank of Albania to draft a similar document.

Even the author of the investigative show "Kronos", Ola Xama, appreciates the fact that there is finally a legal effort to solve the problem of consumer credit abuse.

"Most of the time, members of parliament have been content with raising concerns or calling for hearings with authorities covering this area, but have not exercised their primary role to propose laws and design the legal space for consumer protection, increasing oversight of institutions and eliminating the 'gray' area that paves the way for unilateral contracts in this area," said Xama.

In her analysis of the draft law, Xama notes that it establishes rules that oblige the lender to inform the consumer about the value of the loan, the interest and the total amount that will have to be paid, as well as an accompanying table with all the costs of the loan, including operating costs and liabilities that may arise in the future.

"The initiative also obliges financial institutions to advise consumers on obtaining appropriate opinions and consultations in the event that they need to make a decision, renegotiate or are experiencing a decrease in their solvency," she added.

According to Xama, the initiative could be improved during the discussion in the Assembly, and suggests several aspects where intervention could be made, including stronger rules for financial reporting by financial institutions or protective measures in the field of loans for purchasing homes.

"The recently discovered scheme for the MCA and FINAL entities showed us that a large portion of the loans for which the liabilities had increased several times were mortgage loans," Xama concluded./ BIRN