The Senate acknowledges that the penalties imposed by the CRPC for violations of crediting regulations are justified
29 December, 2020
On December 22, the Department of Administrative Cases of the Senate upheld the judgments of the Regional Administrative Court, recognizing the decisions of the Consumer Rights Protection Centre of Latvia regarding the imposition of fines on three credit companies for unfair commercial practices as justified. The decisions to impose fines were adopted by the Consumer Rights Protection Centre (hereinafter – CRPC) because it saw violations in the activities of these credit companies, as they imposed an additional obligation on consumers to cover the costs of extending the credit term rather than including these costs in the total credit costs.
In the cases pending before the Senate, the matter to be decided under the cassation procedure was whether the total costs of credit to the consumer also includes the costs of credit extension.
In order to answer this question, the Senate suspended the proceedings last year and addressed the Court of Justice of the European Union. In response to questions asked by the Senate, the Court of Justice of the European Union replied that in the case of credit agreements at issue in the present cases, namely, the terms and conditions of which that are agreed between the creditor and the borrower at the time of the conclusion of the agreement, include inter alia the terms of the credit extension, namely the total cost of the credit to the consumer includes the credit extension costs. Thus, when concluding a credit agreement, the consumer must be aware of all the possible costs he or she has to bear in connection with servicing the credit, extending the term of the agreement, etc.
The Senate has four more similar pending cases against four more credit companies.
Factual circumstances in the present cases:
The CRPC found that credit companies had been violating the provisions of the Consumer Rights Protection Law for a long time (10 months) by offering consumers to conclude credit agreements, the costs of which were disproportionate and did not comply with fair business practices. It was difficult for consumers to have knowledge of the specific regulations in the field of crediting, including the verification whether the amount of the credit extension costs has been determined in compliance with legal requirements. In addition, at the time the credit was extended, many consumers were in a situation where they had limited possibilities to choose a service provider and were less protected against unfair provisions of the agreement. The CRPC considers that the conduct of credit companies should be considered as not in accordance with professional diligence and having a significant negative impact on the economic behaviour of consumers.
In February 2017, the CRPC made decisions on imposing fines on several credit companies in the amount of 17,000 – 80,000 euros.
Disagreeing with the fine, the companies addressed a court.
Case No SKA-482/2020; A420187417
Case No SKA-439/2020; A420187017
Case No SKA-436/2020; A420185217
Information prepared by Baiba Kataja, the Press Secretary of the Supreme Court
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