Finantsinspektsioon sent a memo to credit institutions, creditors and credit intermediaries advising them to apply the principles of responsible lending during the epidemic and to be reasonable with clients who have fallen into economic difficulties because of the spread of the virus. The emergency situation should not be taken advantage of to the detriment of debtors. Unreasonable fees, conditions and rises in interest rates should be avoided when loans are restructured.
“We expect that lenders will build on this memo by applying reasonable flexibility and responsible attitudes towards debtors who are having problems with their loans directly because of the temporary circumstances caused by the coronavirus. We recommend that if necessary the internal rules on restructuring loans should be reviewed”, said Chair of the Finantsinspektsioon Management Board Kilvar Kessler.
The wider spread of the new coronavirus may reduce people’s incomes and cause them to turn to credit institutions, creditors or credit intermediaries to ask for their loans to be refinanced or to sign a new credit contract. Before the contract is signed, the lender should give the consumer sufficient information that they can take a rational decision so they do not have problems from excess borrowing.
The European Securities Market Agency (ESMA) and the European Banking Authority (EBA) have also issued press releases that gave market participants recommendations on how they should act under the circumstances of the spread of the coronavirus.