Introduction

Separate and apart from the general legal framework for the protection of consumers in Romania set forth in Government Ordinance no. 21/1992 (hereinafter the “GO”), a niche had existed for creditors enabling them to modify the interest and fees that they charged for certain consumer loans by increasing them as much as they wanted -- such as the law regarding mortgages (Law 190/1999) and the law regarding consumption credits (Law 289/2004). As a consequence, consumers often paid more and more to the banks as interest or fees were arbitrarily increased.

This led to many complaints addressed to the Consumer Protection Office and to the courts. Trust in credit institutions was shaken. In reaction to this, the Government enacted Emergency Ordinance no.147 (hereinafter the “EGO”) that was published in the Official Gazette of Romania no. 795, Part 1 on November 27, 2008 and became effective on December 27, 2008. The EGO is designed to put a stop to abusive practices by credit institutions.

The GO protection framework

The EGO introduced three new articles in the GO (i.e., 9¹ - 9³) for the protection of consumers who conclude credit contracts. The general protection provisions state that when asked by the consumer for a credit offer, a financial services provider (i.e., the creditor) must offer, free of charge, in hard copy, a reimbursement format or other document detailing the total costs of the credit to be borne by the consumer and a copy of the draft credit agreement.

Financial services providers will have to abide by the provisions of the GO in regard to each type of credit agreement they offer to customers. Therefore, if the credit applies interest or any other costs for the consumer, the credit institutions must supply the consumer with the following information: the interest rate, whether fixed or variable; the to