PBZ and Hypo to Refund Overpaid Reminder Fees Within 3 Months

The Croatian National Bank (HNB) announced today that it has accepted the proposals from Privredna banka Zagreb and Hypo Alpe-Adria-Bank to refund the overpaid amounts of reminder fees to delinquent payers within three months, increased by the applicable default interest.

These are reminder fees that PBZ charged during the period from August 21, 2008, to July 21, 2012, and Hypo Bank from August 15, 2011, to July 21, 2012. Namely, on July 21, 2012, amendments to the Consumer Protection Act came into force, prohibiting the charging of reminders to debtors.

At the end of last year, the HNB initiated proceedings against these banks to determine whether the charging of reminders to credit debtors who are late in settling their due obligations, as well as their co-debtors and guarantors, constitutes an abuse of a dominant position by imposing unfair selling prices (i.e., fees) for reminders in relation to the amount of reminders and the method of reminding.

During the proceedings, both banks voluntarily submitted proposals for measures to eliminate the negative effects of their actions, which foresee the return of the overcharged amounts of fees. In detailed explanations of the decisions, the HNB states, among other things, that “delinquent” clients did not have an economically viable option to avoid the conditions that these two banks unilaterally imposed for the service (reminding), its price (reminder fees), and the conditions for providing the same.

The central bank also notes that at the moment of concluding the contract, the customer’s mobility was significantly reduced by the imposed costs of changing suppliers, such as tied purchases and sales in packages, fees for partial and final early repayment of loans, and fees for processing loan applications, administrative burdens, information asymmetry, and low price transparency (which makes comparability difficult). All this further facilitates the “capturing” of clients – credit debtors and opens up the possibility for these banks to exploit their market power and strength to the detriment of their clients – credit debtors, co-debtors, and guarantors, as stated among other things in the explanation.

The HNB’s position is also that costs as operational business expenses should have been covered by the margin as an integral part of the active interest rate and/or possibly interest upon maturity that is calculated on due unpaid receivables.