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Consumer Protection | Bank Services

Bank Services

The rights of financial consumers (natural persons) of banking, financial leasing and vendor services (but only in sale through financial arrangement – sale involving the payment in installments or another form of consumer financing with the same economic substance which implies deferred payment of debt within a specified period or deferred payment sale), as well as conditions and manner of exercising and protecting these rights are regulated by the Law on the Protection of Financial Services Consumers (“RS Official Gazette”, No 36/2011).

The National Bank of Serbia adopted this law with the aim to create preconditions for improvement of business practices and fair treatment of consumers and to set a cornerstone of a regulatory framework that would ensure a more comprehensive and effective consumer protection.

The objective of this law is to improve the manner of providing information to financial consumers, primarily during the pre-contract phase, but also throughout the contract term as well as to ensure detailed agreement is made on pecuniary obligations (nominal interest rate, fees and provisions). The law further specifies special rights of financial consumers and envisages efficient mechanisms for their protection.  

This Law, applied as of 5 December 2011, also stipulates that pecuniary obligations must be definable, which is particularly important in case of long-term loans subject to foreign currency clause. 

The law specifies that a pecuniary contractual obligation (interest rate etc.) is considered definable as regards its amount if it depends on the agreed variable or variable and fixed elements, where variable elements are data that are officially published (reference interest rate, consumer price index, etc.). According to law, these elements are of such nature that cannot be affected by unilateral will of either party. Hence, contractual agreements can no longer contain reference to business policy with respect to elements of the agreement considered compulsory under the law.

The law also regulates equality between the contacting parties and mandates banks to provide clear, understandable and unambiguous information.

In order to regulate the protection of rights and interests of financial consumers, the National Bank of Serbia also issued decisions on the right of complaint regarding banks’ and/or lessors’ operations and mandated the calculation and publishing of the effective interest rate.

Detailed manner and conditions for handling complaints by banks and the procedure to be followed by the National Bank of Serbia upon receiving consumer notification that he/she remains dissatisfied with the service provider’s response to the complaint are stipulated by the Decision Specifying the Way Financial Services Consumer Complaints are Handled by Banks and Lessors and the Procedure Followed by the National Bank of Serbia upon Receiving Consumer Notification (“RS Official Gazette”, No 65/2011) and the Decision Specifying the Terms and Manner of Handling Customer Complaints by Banks (“RS Official Gazette”, No 85/2011).

The uniform terms and method of calculating the effective interest rate are stipulated by the Decision on Terms and Method of Calculating the Effective Interest Rate and on the Layout and Content of Forms Handed out to Consumers (“RS Official Gazette”, No 65/2011). Note that the effective interest rate denotes total costs of a loan and other financial services paid and/or received by the consumer, whereby those costs are expressed as a percentage of the total value of such services on an annual basis. The rate therefore captures the total cost of a loan, which enables the comparison of the same type of product across financial service providers.  

This decision also mandates banks to hand out to consumers, in the pre-contract phase, an offer including basic data, as well as to supply them, along with the copy of the signed contract, with the list of mandatory contract elements and deposit payment/loan repayment schedule.

Protection of rights and interests of legal persons and entrepreneurs is ensured by the Law on Banks (“RS Official Gazette”, Nos 107/2005 and 91/2010) and the Decision Specifying the Terms and Manner of Handling Customer Complaints by Banks (“RS Official Gazette”, No 85/2011) which specifies in more details the terms and manner of  handling customer complaints by banks, as well as procedures applied by the National Bank of Serbia in protecting consumer rights and interests.

Useful information on banking services is available on the National Bank of Serbia’s website intended for financial education of citizens: www.tvojnovac.nbs.rs
 

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