The Assembly passed the Consumer Credit Law, which eliminates processing and early repayment fees for housing loans and introduces a maximum allowable effective interest rate for consumer loans.
Jasna Vujović, the General Director of the Directorate for Internal Market and Competition in the Ministry of Economic Development, explained during the parliamentary debate that this law transposes Directive 2014/17 into Montenegrin law, primarily concerning consumer housing loans.
“Considering that the provisions of this Directive significantly expand consumer rights, we decided to extend its content to all other consumer loans, not just housing loans,” Vujović added.
Consumer loans are those taken by individuals for purposes that are not related to their business activities.
Vujović stated that from the moment the law comes into effect, creditors will no longer be able to agree on an interest rate with consumers that exceeds the average weighted effective interest rate on all consumer loans recorded in the Central Bank of Montenegro’s credit registry for a given quarter, increased by 100 percent.
She explained that this method of determining the upper limit for effective interest rates on consumer loans is based on market principles, respecting competition rules in the sector of creditors and credit intermediaries.
Vujović also highlighted the importance of the Central Bank of Montenegro’s initiative in addressing excessively high interest rates, thus contributing to consumer protection.
Significant improvements to the law were made in the area of assessing consumers’ creditworthiness. Creditors are now required to establish procedures for early identification of consumers facing payment difficulties and ensure contact with such consumers.
“The proposed law also defines the basic rules regarding the assessment of real estate value, which is considered in the assessment of a consumer’s creditworthiness,” Vujović added.
Another new provision is the obligation for creditors to take reasonable and justified measures to reach an agreement on debt collection before initiating enforcement procedures.
During today’s session, lawmakers also approved amendments to the Law on Tax Administration and Payment Transactions, as well as the Law on Voluntary Pension Funds.
