ECONOMY

Banks are told to stick to the law

The government instructed banks yesterday to drop the fine print in lending contracts that has been ruled by the courts as being illegal, in a move the Development Ministry says will help protect the consumer. Lenders will be forbidden from charging clients costs that have been ruled by the courts as being an abuse of market power. «With this decision, we are applying final judicial decisons that have been issued since 1998 but certain financial institutions have avoided applying them,» said Development Minister Christos Folias. «Banks will have to apply these decisions for all their customers without the consumer having to resort to the justice system to avoid the illegal practice.» Along with Yiannis Economou, the general secretary for consumer affairs, the ministry has prepared a list of 15 terms that banks will be forced to apply. Lenders will no longer be able to charge their customers a penalty for paying off their home loan after one year, if the amount had been borrowed with a variable interest rate. Other court decisions to be applied include forbidding banks from charging customers for examining their initial loan application and dropping fees incurred for maintaining a personal bank file for each customer – costs that have been widely charged by many lenders here in recent years when the country was experiencing a boom in the mortgage market. «With simple procedures, consumers will be able to have their money returned that was illegally paid to the banks,» said Dimitris Spyrakos, the legal adviser to consumer group EKPIZO, told Skai Television. In a move to side with consumers, who have seen their purchasing power diminish recently due to rising inflation levels, Folias also called on lenders to lower rates on credit cards. «Interest rates on credit cards from Greek financial institutions are much higher than than those in other European Union countries,» he said. «As part of implementing self-regulation, we invite banks to lower the rates on credit cards to lower levels.» The government will also look into the possibility of forcing banks to lower credit card interest rates by going ahead with institutional changes, added the minister.