Romanians obtained average benefits of EUR 5,000 after having come to terms with their bank

The last two years have significantly altered the profile of consumers approaching the Alternative Banking Dispute Resolution Centre (ABDRC). After having reviewed the 5,560 applications for negotiation with banks/NBFIs filed to ABDRC in years 2022 and 2023, we see that the profile of the consumer of financial and banking services is that of a man of Bucharest, aged between 41 and 50 years, with a consumer loan in RON, who asks the bank for a renegotiation of their loan agreement or seeks to settled amicably a court dispute. In 2023, negotiations returned benefits (EUR 4,980) that are in average 16% higher than in 2021 and 97% higher than in 2019.

Men/Women: In 2022-2023, the majority of Romanian consumers who applied for negotiation with their bank/NBFI via ABDRC are men. Over the last two years, their share has been slightly increasing compared to years 2020-2021 (from 55.7% men, up to 58% men).  

Age: Most consumers who engage in reconciliation are aged between 41 and 50 years. Looking back at the previous years, the share of consumers in the 31-40 age band decreased, while and the share of +51 consumers increased.

Geographical distribution: Over the last couple of years, most of the applications filed by consumers came from Bucharest (18.7%), Arges (8.5%) and Ilfov (5.6%). As to the share of total applications, the Capital City has seen a steady decline over the last six years (from about 28% in years 2018-2019, down to less than 19% in the last two years). The top 10 counties aggregate more than 60% of applications, and half of them have seen increases in the number of negotiation applications filed by consumers to ABDRC. Counties of Buzau, Dambovita and Constanta have made to top 10 for the first time. The biggest increase was observed for County of Arges, while the fewest applications (12) came from Harghita.

Issues reported in the applications submitted to ABDRC: ABDRC received over more than 5,550 applications in 2022 and 2023. Most applications concerned:  Contract renegotiation (by loan conversion, negotiations to find solutions, payment suspension: 13.2%), and amicable settlement of court disputes: 13.1%. Refunds (of fees, interest) were claimed by 11.6% of consumers, whereas solutions to problems caused by the increase in IRCC/ROBOR or the switch to a fixed interest rate were pursued in 10.6% of applications. Loan rescheduling, staging-out or refinancing was sought in 7.4% of the applications, while reduction of the principal or instalment, plus writing off a part of the debt, was the subject of 6.7% of applications.

Currency of the loans subject to applications: The majority of the loans referred in the reconciliation applications are extended in RON (88.6%). Over the last six years, we can see a significant and steady reduction in the number of applications concerning loans in EUR, CHF and other currencies (from 25-30% down to 10%). Reasons can be: refinancing in the currency Romanians receive their income in; conversion of loans with past repayment difficulties into RON; and recourse to reconciliation that address problems caused by the loans extended in foreign currencies.

Way of referral: For the time being, ABDRC’s work takes place 96.4% online. Most consumers fill out the application to enter into negotiations with the bank/NBFI directly on the www.csalb.ro website, using the IT application. The average time to fill out an application on the website is less than 7 minutes.

Alexandru Păunescu, Representative of the National Bank of Romania in the ABDRC’s Board: “Over the last years, Romanian consumers of financial products and services have gone through some difficult times. We lived two years of a health crisis, and then we faced high inflation rates and rising borrowing costs, for both new and outstanding loans. The applications Romanians file to their banks and NBFI via ABDRC point to a need to adjust certain loan agreements to the problems they are currently experiencing. Then, the fact that increasingly more consumers seek to have their court proceedings settled through negotiation shows that alternative dispute resolution is no longer just an exception, but has become a practice for some banks, as it is recommended also by judges in more and more cities across the country. The benefits include also taking the load of lengthy and costly trials, for both parties involved, off the courts. Since 2021 and until late 2023, ABDRC settled amicably more than 500 cases which were in various stages of the proceedings. Fortunately, the banks’ increased willingness to address the problems faced by consumers mirrored seen also in the outcome of the negotiations. As such, the average amount of the benefits obtained from reconciliation almost doubled compared to 2019, the pre-pandemic year.”

About ABDRC: ABDRC is an entity set up under a European Directive, and intermediates, free of charge and in not more than three months, negotiations between consumers and banks or NBFIs, for contracts/agreements in progress. Consumers from any county of the country may file requests with the Alternative Banking Dispute Resolution Centre (ABDRC) filling-in an online form directly on the website www.csalb.ro. Once the bank accepts to enter the conciliation/negotiation procedure, a conciliator is appointed. ABDRC works with 17 conciliators, of the best specialists in law and with relevant experience also in the financial and banking field. Everything is settled amicably, and the understanding between the parties has the power of court judgment. More information about the work of the Centre is available by phone at 021 9414 (charged a normal rate).

 

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