PERMISSIBILITY OF APPROVAL AND OTHER FEES IN CONSUMER LOAN CONTRACTS IN SERBIA

Abstract

Foreign-owned banks from the European Union dominate Serbia’s financial landscape. However, one of the controversies in the banking sector in the last decades has been approval and similar fees in loan contracts. The aim of this paper is to take a look at this issue through the lens of a consumer. Since there is no official data on the aggregate amount of processing, approval and similar fees in thousands of lawsuits against banks, the methodology in this research is largely based on the analysis of relevant legal acts and case law. A minor part is the statistical analysis of the context of the consolidation process in the banking sector in the last decade. The research has found multiple issues in the application of the rule of law in regard to consumer loans. Not only did banks prepare loan contracts with provisions that allowed them to deduct one-off payments of approval and similar fees from a loan amount, but customers may have paid for approving, disbursing and managing a loan twice or even multiple times. There were also cases showing that the process of approving a loan did not meet the requirements of providing the customer with adequate information in a pre-contractual phase, leading to questions on transparency and the balance between a bank and its customer. Future research would benefit from quantitative data about the amount of approval and similar fees in lawsuits and the exact number of lawsuits against banks in this respect.