Consumer credit legislation in Central and Eastern
Following the political changes of the late
1980s and early 1990s, the Central and East European countries
(CEECs) experienced the birth of a new economic environment. A new
banking system has been set up and new market players have started
to provide a wide range of financial services.
Many of the newcomers concentrated on the most
profitable areas of banking operations, which did not include
retail finance – at least in the first round. Those institutions
that played a leading role in this market segment did not lose
their position, but as more and more institutions started
operations in the retail field, they acquired a continuously
growing market share. These new retail service providers were
forced to turn to a wider range of services because of the
increasing competition in the corporate market. In addition it is
worth mentioning that some consumer credit specialists are also
present in the CEECs, and they are looking for ways to expand their
business in the region.
Retail markets are becoming more attractive for
financial service providers, and the Central and East European
countries have had to establish an adequate regulatory environment
for this emerging and developing sector. At the same time, these
countries have applied for EU membership, the basic criterion of
which is compliance with European regulation. Different countries
have used different methods to put their law in line with the
relevant EU rules.
Therefore, the CEECs will have to comply with
consumer-related EU rules and establish policies in this context.
Central and Eastern European regulators must make a policy choice:
whether to follow a protectionist consumer policy or whether to
support the development of free market access, with a satisfactory
level of consumer protection. This is a policy decision, but
compliance must be reached on the regulatory level: national rules
must implement the EU consumer credit directives.
In general there were no common grounds of
consumer credit regulation in the CEECs, as the legislative
structures were highly divergent and there were no special rules
for protecting consumer interests with regard to consumer credit.
Therefore the existing European directives constituted the common
basis for the candidate countries to establish a new regulatory
framework. The European directives follow the principle of minimum
harmonisation and leave a certain room for national specialities.
In most of the candidate countries, the implementation of the
European rules meant a higher level of regulation, and the new
consumer credit laws are considered to be more developed than the
Harmonisation can be achieved via one of two
different approaches. In the first case, the candidate country
adopts a separate piece of legislation that contains all the
relevant EU-related consumer credit provisions. Most of the
countries have followed this approach – Slovenia, the Slovak
Republic, the Czech Republic, Latvia and Poland – although they
often do a relatively strict implementation of EU directives.
Estonia is special in this respect, because it has adopted
altogether new legislation – the Estonian Obligations Act – that
does not deal exclusively with consumer credit but addresses other
more general issues as well.
The second approach is to keep the existing
legislation that already deals with consumer credit-related issues,
but to upgrade it such that it complies with EU requirements. This
could result in a higher level of integration with existing
national rules. Hungary and Lithuania follow this approach.
These two approaches represent the most
important differences between the candidate countries in amending
their legislation on consumer credit. A detailed presentation and
assessment of the national consumer credit rules is contained in
the separate cou ntry reports in Part II. This ensures an accurate
introduction to the newly adopted regulation. The statistical annex
presents additional data, organised by country.
There have been already some attempts to assess
the state of consumer credit regulation in the candidate countries.
What distinguishes this study from these former assessments is that
the present work is the first effort to give a comprehensive,
country-by-country evaluation of the adopted consumer credit laws
(except in the case of Bulgaria and Romania where this work is
planned for a later stage). The main reason for this is that –
although implementation is executed on the basis of ‘law
harmonisation programmes’ – most of the candidate countries could
only adopt their new consumer credit laws in 2000 and 2001.
For more CEPS analyses see the