A case on the obligation of a credit institution to pay the credit borrower protection fee has been initiated
On Friday, June 28, a case was initiated before the Constitutional Court on compliance of paragraphs 2, 3 (in a wording in force from 1 January 2024 to 4 June 2024), 4, 5, 6, 10, 11, 12, 13, and 15 of Section 8.4 of the Consumer Rights Protection Law, as well as Paragraph 43 of the Transitional Provisions with Article 1 and the first three sentences of Article 105 of the Constitution of the Republic of Latvia. The applicant is a credit institution issuing also mortgages.
The contested provisions govern the objects of the duty of mortgage credit borrower protection fee, the subjects paying the fee, the sum of the fee, procedures on how the payer of the fee submits the fee declaration and pays it into the State budget, as well as what process shall be applied to disputes on the sum of compensation between the consumer and payer of the fee. The legal provisions also determine borrowers who are entitled to receive a compensation to be paid from the revenue of the fee, as well as actions of the payer of the fee in relation to the above compensation, and the period for which the fee and compensation shall be applied.
It follows from the application and the appended documents that in accordance with the contested provisions the applicant is obliged to pay the mortgage credit borrower protection fee and calculated related credit interest compensation to be paid to the mortgage credit borrower. The applicant states that the duty to pay the fee as well as other related duties resulting in additional labour force and information technology resources, including direct responsibility of the applicant on correctness of the compensation calculation infringes on its property right included in the first three sentences of Article 105 of the Constitution, as well as violates the protection of legitimate expectations included in Article 1 of the Constitution.
The Constitutional Court invited the institution that has issued the contested law – the Saeima – to submit to the Constitutional Court a reply with the explanation of the actual circumstances of the case and the legal basis by 28 August 2024. The deadline for preparing the case is 28 November 2024. The Court will decide on the procedure and date for hearing the case once the case is prepared.
The related Case No. 2024-15-01
Linked case: 2024-15-01