MEDIA RELEASE
04/09/2024
Due to the increased interest of public concerning the draft Law on Consumer Loans, the Central Bank of Montenegro (CBCG) issues the following
MEDIA RELEASE
The representative of the Directorate for the Supervision of AML/CFT Compliance and the Financial and Credit Institutions Consumer Protection was a member of the interdepartmental working group that prepared the Draft Law on Consumer Loans, which implemented Directives 2008/48 and 2014/17/EU and adopted the best practices of the EU member states. As the proposer of the law, the Ministry of Economic Development organised a public hearing on the draft Law in December 2021, during which all stakeholders had an opportunity to give their objections, proposals and suggestions.
In February 2024, the CBCG prepared an analysis of interest rate trends in the Montenegrin market, which showed a growing trend of lending interest rates, including consumer loans. Considering the challenges the consumers, as the weaker contracting party, face when concluding loan agreements with creditors and taking into account their adequate protection, the CBCG initiated defining the maximum allowed effective interest rate on consumer loans by the new Law on Consumer Loans following the best practices of the EU member states.
After a detailed analysis of the comparative solutions applied in the EU member states and taking into account the specifics of the Montenegrin financial market, the CBCG proposed that the highest effective interest rate on consumer loans must not exceed the average weighted effective interest rate of all consumer loans, increased by 100%. Therefore, this legal solution is based on the market principle and does not administratively limit interest rates, but thus affects only extremely high interest rates and ensures a higher level of consumer protection.
In July 2024, the European Commission gave a positive opinion to the entire Draft Law on Consumer Loans. Thus, the CBCG's initiative to the Ministry of Economic Development, as the proposer of the Draft Law, has been confirmed as a good European practice.