Financial authority: Wide variety in lenders' coronavirus client care ({{contentCtrl.commentsTotal}})

Estonian FSA (Finantsinspektsioon) logo.
Estonian FSA (Finantsinspektsioon) logo. Source: Siim Lõvi /ERR

Estonian lenders and leasing companies have offered their clients widely differing conditions in alleviating debt and related issues in the wake of the coronavirus pandemic, the Estonian Financial Supervisory Authority (FSA) says.

An FSA survey revealed that aLL banks, leasing companies and most creditors have offered clients in difficulty during the pandemic options to change their debt repayment terms.

However, these options, from four banks and the same number of leasing companies, came with strings attached, BNS reports.

Leasing companies are primarily used by customers to purchase cars.

FSA wants more uniformity from lenders

The FSA is calling for uniformity on terms and conditions.
 
"In order for consumers to be given uniform and transparent treatment, banks should have similar terms and conditions for the adjournment of payments," FSA  board chair Kilvar Kessler said, BNS reports.

Grace periods can range from one month to one year, BNS reports, and can also consist of part-reduction in payments through to a full grace period. Other options include refinancing and postponing maturation dates.

Other variations include different documentation requirements, credit reassessments when changing terms and conditions or refinancing, details on changes in employment or income arising from the pandemic, and charging fees for a grace period itself.

Authority started looking at issue in late March

The discrepancies are there despite the FSA's efforts to bring clarity to the issue almost a month ago, with another memorandum issued at the beginning of this week.

On March 26 the FSA published a memorandum to lenders on the application of the principle of responsible lending, BNS reports.

This was prompted by the impact of the COVID-19 virus on the credit market and the economy on the whole. 

Kilvar Kessler added that the FSA has established clear conditions for banks for the handling of the adjournment of the fulfillment of loan agreements, or loan repayment moratoria.

"At the same time, also other professional lenders can establish conditions for their clients based on the guidelines issued by the FSA on April 20 if they consider it necessary," he said. 

A minority of creditors, 5 out of 47, charged a fee for instigating a grace period, including two banks.

The FSA interviewed 81 lenders and leasing companies at the beginning of the month, to chart the situation on the market and draw attention to the need for flexibility in interacting with customers who got into trouble.

The FSA says it wanted to emphasize that professional lenders must not take advantage of clients who have found themselves in short-term difficulty, but instead be sensible and flexible, avoid unreasonable fees, terms and conditions, and increases in interest rates in the handling of loan agreements, cases of restructuring, and violations.

On April 20, the FSA published a recommendation concerning legislative and private moratoria on debt repayments, BNS reports.

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Editor: Andrew Whyte

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