The proposed changes to the Consumer Credit Act may lead to the displacement of legally operating microcredit companies and open the way for illegal loan sharks. The Association for Responsible Non-Bank Lending (AONK) warns about this. The industry organization admits that some of the proposals are positive, but insists that the regulations should not endanger the activities of companies in the sector, which according to the association provide jobs for over 10,000 people.
See also the full position:
"We see positive changes, but also dangerous proposals that, instead of regulating the sector, risk pushing out companies operating in the open with over 10,000 employees from the market - in practice eliminating legal micro-lending.
This will create a vacuum that will quickly be filled by loan sharks and other criminal players. This trend is already visible throughout the country and such changes will only accelerate it.
We call for no experiments with the sector and for expertise not to be replaced with populism.
We will review in detail all the proposed changes to the bill and present our analyses and conclusions at a press conference next week."
Earlier it became clear that the PG will submit a bill to amend the Consumer Credit Act, which addresses the problem of tempting offers for quick loans. This was said by the MP from "Progressive Bulgaria" Konstantin Prodanov at a briefing in the National Assembly on Friday.
He pointed out that there are signals of "garage operators" who lure with offers for quick loans.
Obviously there are companies that operate on the edge of the law, quite often outside it, who also rely on tactics of intimidation and arm-twisting. There is an increase in loans and more and more Bulgarians are having to resort to these services, and the current regulation is clearly not adequate, Prodanov commented.
The goal is to achieve maximum consumer protection, Prodanov added. According to him, it is based on a European model, which cuts off the possibility of taking out a loan of 500 euros and returning 5,000 euros. This bill transposes a European directive and the Ministry of Economy has made additional proposals to strengthen consumer protection and shed light on the sector. In our opinion, they are a good first step, but they are not enough, he explained.
Between the first and second readings, we will submit proposals to limit the granting of quick loans in the dark, because a large part of gambling addicts resort to this service in the late hours of the day. We will also introduce a ban on those convicted of street crimes from being part of quick loan companies, and the franchise model, which sublicenses licenses, will also be banned, Prodanov noted.