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February 26, 2021

FSUG experts: Debt discharge offers protection to debtors in difficulty, tempers aggressive lending conduct

The debt discharge law is the right path to be followed to help as many borrowers in financial difficulty as possible, given that in Romania there has not been so far another law to support them, and banks have been reluctant to come up with concrete solutions to their problems, reads a letter sent to EU Commissioners Jonathan Hill and Pierre Moscovici by the experts of the Financial Services User Group (FSUG).

The letter is in response to that sent by two EU commissioners to Romanian Minister of Finance Anca Dragu, in which they expressed concern about the negative effects that the debt discharge law would have on the Romanian economy.

The letter refers also to the findings of the study conducted by London Economics for the FSUG entitled “Study on means to protect consumers in financial difficulty: personal bankruptcy, datio in solutum of mortgages, and restrictions on debt collection abusive practices.”

“The study presents a series of concrete measures to support borrowers that are in financial difficulty. As we have mentioned in the position document on the study, we argue the position according to which the debt discharge offers consumers more important benefits than the system in which the Romanian borrowers have been until now, the absence of the possibility to reduce their debt to the bank respectively. Unfortunately, this is the sad situation in which Romanian borrowers are in now. Debt discharge not only offers protection to those who can no longer pay their debt but, in our opinion, may also bring an increased discipline on the market that would temper the aggressive and dangerous lending conduct,” mentions the quoted document.

According to it, the Romanian users of financial services have been among the most affected by over-indebtedness in the European Union.

According to the authors, a copy of the letter was sent also to European Commissioner for Justice and Consumers Vera Jourova, President of Romania Klaus Iohannis, and Public Finance Minister Anca Dragu.

The FSUG document was sent also to back the similar approach of four organizations representing the interests of financial services consumers and users in Europe (AURSF – Romania, Better Finance, BEUC and COFACE)

The FSUG is a group of 20 experts from EU states which advises the European Commission for preparing regulations affecting users of financial services, provides feedback about the practical implementation of these regulations and provides the Commission with examples of major problems faced by financial service users in the EU states.

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