19th July 2023, Skopje – Parliament of the Republic of North Macedonia gave green light to the legal solution, prepared by the Ministry of Finance, geared towards greater protection of the citizens using services rendered by the financial companies.
The Law ensures significantly greater protection of the citizens using services rendered by the financial companies and boosts the confidence in financial companies, by prescribing the maximum amount of all loan-related costs, abolishing the possibility for extending loans for the purpose of paying off already outstanding loans in the same financial company, abolishing the possibility for companies holding a permit or a license pursuant the Law on Games of Chance and Entertainment Games to act as financial company’s loan intermediaries, i.e. to offer loan products.
Moreover, pursuant to the legal amendments, financial companies can no longer conclude consumer loan agreements, if the costs not included in the annual total costs rate exceed 60% of the amount of the approved loan. In particular, fees include all costs the client pays or is obliged to pay throughout the validity of the agreement, which arise or are anyhow related to the consumer loan agreement or the related services, and such fees may not exceed the amount of the loan principal.
Financial companies will be obliged to establish a loan risk management system, pertaining to assessing the creditworthiness of the client to repay the loan, as well as assessing the financial company’s loss due to the inability of the client to settle the liabilities as per the agreed amount or within the agreed deadlines.
Under the Law, supervision over the financial companies’ operations is strengthened, following the example of the other regulatory authorities, with a respective rulebook to be stipulated and adopted therefore. Moreover, fines in the amount of EUR 8,000 to EUR 10,000 are also envisaged for non-compliance with the legal provisions.
Furthermore, the amendments provide for strengthening the regulatory framework for the operations of the financial companies on the market in North Macedonia, all to the end of standing for sound financial institutions offering an alternative to the banking operations, rather than just being companies offering short-term loans to the citizens.
Among the important amendments is the one pertaining to the increase of the amount of the founding capital for establishment of a financial company from EUR 100,000 to EUR 500,000, whereby such founding capital may not be provided from loans and credits. Legal amendments also prescribe for revoking the licence of a financial company should it be imposed two measures, i.e. fine or temporary prohibition to perform an activity, within one year.
Amendments to the Law have arisen from the need to strengthen the regulatory requirements and standards the financial companies have to meet, the number of which has significantly increased, as has the number of clients being extended consumer loans by the respective companies.
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