NBS Takes Clear Position – Banks Have the Right to Charge Loan Fees and Costs

A bank has the right to charge fees and costs, in addition to a loan, under the condition that those fees and costs are included in the calculation of the effective interest rate, that is, the total price of the loan, so that each client would be able to compare the offers of various banks, the National Bank of Serbia (NBS) said for the media.

The central bank says that this position of the NBS is well known to the public and that it has been repeated several times since the very beginning.

The NBS says that the Law on the Protection of the Users of Financial Services and the bylaws adopted based on that law recognize those costs and fees as legal and that it is also specified how they are displayed and calculated.

Furthermore, there is no regulation that forbids a bank or any other legal entity from having a two-component price for the services it provides.

The charging of a fee as a percentage of the value of the subject is a widely accepted rule, which is also implemented when it comes to court and administrative fees, attorney tariffs and so on, the NBS says.

Neither the European Central Bank nor many central banks within the system of European central banks have the jurisdiction regarding the determination of the legality of banking fees.

Still, these central banks, which are in charge of controlling the banks, have not disputed the banks’ rights to charge fees and costs.

The Court of Justice of the European Union has a rich history of practice when it comes to this issue. The court’s position is that banking loan fees are not unjust or forbidden in and of themselves, that is, as long as the bank carries out certain activities or provides certain services related to those fees.

There have been no cases where this court has not conditioned the legality of the contracting of this kind of a fee on a request to have the bank prove the specification and the structure of the costs, for each individual user, which has also been a request of local courts, the NBS says.

Narodna banka Srbije Beograd

National Bank of Serbia

Supreme Court of Cassation

European Central Bank

Court of Justice of the European Union

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loan costs

Law on the Protection of the Users of Financial Services

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