Romania's consumer protection authority fines 11 banks for instalment calculation formula
The Romanian National Authority for Consumer Protection (ANPC) fined all 11 banks it investigated as part of a comprehensive action concerning long-term mortgage loans.
ANPC has identified "misleading commercial practices committed by the banks regarding the calculation of the instalments." Namely, according to the repayment schedule, the instalment included, during the first years, mainly (75% of the instalment) the interest related to the loan and, to a smaller extent, the principal.
"By this method of calculation, consumers were, in fact, paying mainly interest," ANPC said, according to Economica.net.
However, this was hardly a secret, and the practice is common among Romanian banks. Although it generates more business for the bank for the same amount lent (compared to a liberal payment of principal), it also allows customers to borrow more under the maximum indebtedness conditions.