The Minister of Justice Hanno Pevkur replied to the interpellation concerning mortgage loans in Estonia (No 316), submitted by Members of the Riigikogu Peeter Võsa, Vladimir Velman, Valeri Korb, Mihhail Stalnuhhin, Kadri Simson, Mailis Reps, Ester Tuiksoo, Viktor Vassiljev, Aadu Must, Tarmo Tamm, Eldar Efendijev and Enn Eesmaa on 28 March. 

The interpellators referred to the recommendation of the International Monetary Fund to the effect that Estonian authorities need to consider establishing limits on the ratios between the loan and the value of the security, and the loan and the income. The justification had been that the proportion of short-term variable interest rate mortgages was very high in Estonia. This increases however the risks related to the housing market and economic recession. The interpellators wished to know if any draft Act was being prepared in the Ministry of Justice for preventing the forced selling of homes and for elimination of loan slavery. 

Pevkur explained that the state intervenes in the activity of the financial sector first of all through legislation, that is, the shaping of the regulative environment. He noted that, as of 1 January 2007, the obligation of banks to adhere to the principles of responsible lending when issuing loans had been applied. This requirement has put an obligation on banks to take more account of the needs of the borrower and his or her ability to service the loan. 

The requirement of responsible lending has been applied to other creditors besides banks at the level of an Act since 2011 when the amendments arising from the new Consumer Credit Directive entered into force in the Law of Obligations Act which significantly improved the level of consumer protection in the field of consumer credit. “In comparison with earlier time, consumers obtain more pre-contractual and contractual information in a clearer form. Before entering into an agreement, the creditor must assess the creditworthiness of the consumer and explain to the consumer whether the credit product offered meets the needs and financial situation of the consumer,” Pevkur emphasised. He added that the consumer has the opportunity to withdraw from the agreement within 14 days without giving reasons. As will be remembered, earlier, this period was 7 days. “In addition, the opportunities of the consumer to repay a loan early were extended and a number of other amendments for the benefit of the consumer were made,” the Minster explained. 

Pevkur noted as an important aspect that, starting from 2009, the General Part of the Civil Code Act contained a regulation which attempted to protect the consumer from the usurious interests of the consumer credit agreement. “In comparison with ‛boom times’, when taking a loan today, consumers are clearly in a more protected position than they used to be earlier,” Pevkur said. 

When speaking of the future plans of the Ministry of Justice, the Minister noted that there were several ongoing projects which aimed to increase consumer protection and to make the giving of loans more responsible. As an example, he pointed out that, together with the Ministry of Finance and the Ministry of Economic Affairs and Communications, the Bill on Amendments to the Law of Obligations Act and the Advertising Act had been submitted to the Riigikogu with the objective of specifying the obligation to adhere to the principle of responsible lending in the Law of Obligations Act. It amends the Advertising Act so as to ensure that the advertising of consumer credit is responsible and balanced, and to avoid leaving an impression in advertising that consumer credit is a risk-free and easy opportunity to solve financial problems. 

Pevkur replied to three more interpellations. They were the following: 

the interpellation concerning offences committed in the interests of a political party (No 306), submitted by Members of the Riigikogu Jaan Õunapuu, Indrek Saar, Marianne Mikko, Mart Meri, Kalev Kotkas, Andres Anvelt, Rein Randver, Neeme Suur, Jevgeni Ossinovski, Kalvi Kõva, Eiki Nestor, Kajar Lember, Heljo Pikhof, Jaak Allik and Rannar Vassiljev on 13 March; 

the interpellation concerning implementation of the Resolution of the Riigikogu “Development Objectives of Criminal Policy until 2018” (No 307), submitted by Members of the Riigikogu Neeme Suur, Andres Anvelt, Kalev Kotkas, Mart Meri, Marianne Mikko, Karel Rüütli, Sven Mikser, Indrek Saar, Jevgeni Ossinovski, Jaan Õunapuu and Kajar Lember on 14 March; 

the interpellation concerning implementation of the Resolution of the Riigikogu “Development Objectives of Criminal Policy until 2018” (No 308), submitted by Members of the Riigikogu Neeme Suur, Andres Anvelt, Mart Meri, Marianne Mikko, Karel Rüütli, Sven Mikser, Heljo Pikhof, Rannar Vassiljev, Jaan Õunapuu, Jevgeni Ossinovski, Helmen Kütt, Eiki Nestor, Kajar Lember, Rein Randver, Kalle Laanet, Lembit Kaljuvee and Kalev Kotkas on 18 March. 

During the open microphone, Mihhail Stalnuhhin took the floor.

The Riigikogu Press Service