Updates on Consumer Protection in Debt Assignment Activities under Romanian legislation

1. Romanian Law Enhances Consumer Protection in Debt Assignment Activities

The Romanian Parliament has adopted an additional law aimed at protecting consumers who are borrowers under credit agreements. Law No. 243/2024, which came into force on 11 November 2024, introduces several measures to ensure fair treatment of consumers in relation to the total cost of credit and the assignment of claims.

The law applies to relationships between consumers, non-banking financial institutions, and entities engaged in debt recovery activities. It establishes rules to protect consumers against excessive interest rates and maintain contractual balance.

Whereas the law treats exhaustively the interest rate ceilings that can be charged by non-banking financial institutions under credit agreements with consumers, the law also includes a section on transparency in the activity of debt assignment.

The law ensures transparency in claim assignments by requiring consumers to be informed about the amount owed and presented with supporting documents.

To ensure transparency in the activity of debt assignment, at the time of the transfer of an individual debt or within a portfolio of debts, the law states that the consumer must be informed of the amount owed and must be provided with the supporting documents, in compliance with the deadlines and procedures stipulated in Articles 59 and 60 of the Government Emergency Ordinance No. 52/2016, with subsequent amendments and completions.

The entity engaged in debt recovery is prohibited from charging the debtor a total amount that exceeds the amount of the debt, as certified by the creditor at the time of concluding the assignment contract, including any expenses related to the recovery of the credit, including enforcement costs.

The amount of the debt will include all costs, including interest, penalty interest, commissions, fees, and any other types of costs that the consumer must bear in connection with the credit agreement and which are known by the creditor, calculated at the time of the assignment of the contract and presented in a detailed, written format to the consumer.

The law is aimed at bringing additional clarity on the amounts that can be claimed by a recovery entity from a debtor qualified as a consumer which should ease the burden of courts dealing with consumer claims on unjustified requested amounts and add clarity in a NPL sale transaction.

2. Clarifications with respect to credit purchasers and credit servicers of non-performing loans

On 7 March 2024, the Government Emergency Ordinance no. 15/2024 on credit servicers and credit purchasers (also known as the NPL Ordinance) was published in the Romanian Official Journal, which transposed Directive (EU) 2021/2167 of the European Parliament and of the Council of 24 November 2021 on credit servicers and credit purchasers and amending Directives 2008/48/EC and 2014/17/EU into Romanian legislation.

Even though secondary Romanian legislation is yet to be issued by the competent and supervisory Romanian authorities, there have been some interpretations and clarifications issued with respect to the NPL Ordinance which should ease the burden of the entities falling under the remit of this piece of legislation, respectively with respect to their obligations to report information related to the transfer of non-performing loans to the competent authorities, for example, reporting period, forms and information to be provided under such forms.