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Tuesday 17.07.2018 | Name days: Aleksejs, Aleksis

Consumer Rights Protection Centre: mortgage lending needs a new law

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Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RU, Consumer Rights Protection Centre director Baiba Vitolina

Consumer Rights Protection Centre director Baiba Vitolina

Unfortunately, no one is taking the initiative to develop «Mortgage Lending Act», thus matters are sold in an fragmented manner and directed to the sector of the consumer protection, which in turn cannot be arranged without this law, Consumer Rights Protection Centre (CRPC) director Baiba Vitolina told in an interview to the business news portal BNN.

Similarly, she also singles out silly excuses the Center encountered upon inspecting ski runs and stresses Latvia finally has to specify what matters the Court of Arbitration decides upon and who supervises it. She also adds the CRPC in Latvia has more authority than the respective institutions in Lithuania and Estonia.

You inspected 24 out of 30 ski runs in Latvia. What did you discover?

According to the law, we are to supervise 16 types of dangerous equipment. This year we opted for ski runs and one more. We will round the inspection up in eight years, as the Center lacks funds, which, to my mind, are not adequate. We are still to assess the infringements we discovered, namely, ski lifts maintenance was not sufficient. There will definitely be some kind of punishments, they are not imposed on the spot. There is a special procedure carried out by the administrative offences officer. Businessmen do not offer any reasonable excuses. They say no one is checking that, the CRPC is the first… Others simply show their ignorance, while some admit their neigbour made the ski lift himself.

Why do you think licensing non-bank lenders is not to solve the problem?

Lisensing cannot solve everything, it is supervision that matters the most. The good thing is we get an additional tool to fight unfair businessmen, as it will be possible to deprive their licenses. From consumers perspective, licensing is not a big deal. Moreover, it is not enough to licence creditors, because it is exactly loan mediators creating the negative image and they are not licensed at all. They are fraudsters promising to arrange bank loans, thus they collect considerable payments from desperate people. There are also clients that banks refuse to service, despite the mediator had pledged something else.

Some of these loan mediators are recklessly concluding such contracts despite there is no agreement from the part of the creditor. Moreover, they claim advance payment for their services. While some of them mislead people into believing that otherwise they will not be qualified to be granted a loan, although in reality the person would have obtained a loan either way. Consequently, people spend additional money on these mediators. When Great Britain licensed consumer crediting, many turned into mediators or consultants. It will turn out to be easier for the existing commercial banks, because we will supervise them less.

Latvia finally has to specify what matters the Court of Arbitration decides on and who supervises it.

How is it possible to protect loan takers without the «Mortgage Lending Act»?

I believe we need this law. Unfortunately, no one is taking the initiative to develop «Mortgage Lending Act», thus matters are sold in an fragmented manner and directed to the sector of the consumer protection, which in turn cannot be arranged without this law.

This way both consumers and businessmen would be aware of the rules – how properties are confiscated and whether they can be deprived of their homes. Back in the fat years people did not even know what they were signing up for. The state should not allow this free drift mode.

We must bear in mind that each regulation is able to alter interest rates in the loan market. We should learn from US practice with an insolvent mortgage taker simply giving back the key and no one is pursuing him or her anymore. It is a politically sensitive issue. Such an agreement would cost more and there would be no loans covering 100% of the property value.

How do you fight excessive penalty interest payments?

We do have the power to limit these penalty interest rates thanks to Consumer Rights Protection legislation. I must say the so called fast SMS credits are applied the highest interest, not mortgage loans.

Last year you punished several recruitment companies promising work abroad. What did they do wrong?

The State Employment Agency informed us about recruiters without a respective license. They were punished for not presenting the number of the license in commercials. If they had charged people without sending them to foreign factories, it would have been considered a criminal offence, rather than a breach of consumer rights. In 2005 three mutual Baltic states agreements were signed on consumers rights protection and market supervision.

What is the performance of Latvian CRPC, compared to Lithuania and Estonia?

The most recent cases with Latvia CRPC collaborating with the neighbours include VIASAT, IMP Baltic, airBaltic, ect. We also collaborated with Estonians when airBaltic activities contradicted good faith in business, namely, the airline was selling tickets very well aware it was going to cancel these flights. Estonians took day-offs, booked hotels, but there were no flights.

The CRPC can only order doing away with the infringement, it cannot impose any sanctions on the company’s activities in Estonia. In case of Latvia all these functions are concentrated within the CRPC, thus we can easily access detailed information. It is easier to work for us, because we have greater authority than the respective institutions in Estonia and Lithuania. We do not have to apply to the court to deem something as lacking legal force or unfair. Similarly, we ourselves make decisions on sanctions, however there are pros and cons of that.

Is it possible to reach a balance between consumers attraction through commercials etc. and their rights protection?

I believe a balance is possible if there are companies willing to operate long and fair in the domestic market. If they want to stick to their positive image, they agree to what the CRPC decides, unlike what happened five years ago. Businessmen are perfectly well aware negotiations can lead to a commercial practice satisfying both of the parties, including consumers. It is much more difficult to arrange the market if there is aggressive competition among the companies, like it is for mobile operators. The competition is so fierce if one of them opts for unfair practice – deliberate misinformation of consumers – the other has to respond in the same way. It is important to create a new dispute resolution commission at the CRPC with the Chairman of it, consumers non-governmental organizations, our employees and businessmen themselves making decisions.

Are your budget and staff sufficient to carry out these functions?

No, they are not, the budget has been cut significantly and it is complicated to implement all the functions the state has entrusted to the Center. There are certain fields we cannot manage at all. These cuts made us come to a conclusion we would no longer supervise electronic communications terminal equipment in the competence of the Transport Minister. Neither do we keep supervising fridges energy efficiency, which would claim huge funds.

Is it possible to solve and argument between a consumer and an insolvent businessman?

It is not, if the company is left with nothing at all. If there is still something the company can sell, one can turn to the administrator with a claim. Stock capital does not matter that much. We believe it is too easy in Latvia for an unfair plastic windows producer to launch another company under another name and keep misleading consumers, despite having already deceived 100 consumers that had paid 200 lats for these windows but never saw them. There are no ways we can ban them from doing business.



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