The era of "thugs" in the payday loan business is coming to an end, asserts Zdravko Markov, a Member of Parliament from "Progressive Bulgaria". Together with his parliamentary group and the Committee on Budget and Finance, he and his colleagues have been working on legislative changes for over a month. According to Markov, it is imperative to close every loophole that allows for bypassing the law. This will be achieved by increasing capital requirements for companies, completely restricting the franchise model, and eliminating the possibility for operators to sublease their licenses almost free of charge.
A bill to amend the Consumer Credit Act was presented in the National Assembly, aimed at curbing the enticing offers often backed by so-called "backyard operators". Konstantin Prodanov from "Progressive Bulgaria" warned that these companies often operate on the edge of, or entirely outside, the regulatory framework, using tactics of intimidation and coercion. As more and more Bulgarian citizens are forced to seek these services, the current regulation is proving to be completely inadequate, the MP explained.
The goal of the new measures is to achieve maximum protection for consumers, with the project transposing a European directive. The Ministry of Economy's proposals for bringing transparency to the sector were assessed by Prodanov as a good first step, which, however, needs to be built upon. He revealed part of the future proposals that will be submitted between the first and second reading:
- Restricting the issuance of payday loans during the dark hours of the night to reduce access to these services for gambling addicts during late hours.
- Introducing a ban on individuals convicted of street crimes from participating in the management or ownership of payday loan companies.
- Banning the franchise model for subleasing licenses.
By building upon a European model, lawmakers aim to put an end to the vicious practice where taking out a loan of 500 euros leads to an obligation to repay 5000 euros. Regarding the current issue of gambling advertising and the idea of "Democratic Bulgaria" for its ban, Konstantin Prodanov stated that he welcomes the initiative. However, "Progressive Bulgaria" will propose a clearer and more refined concept to limit advertising without triggering an undesirable expansion of the shadow sector.