Earlier this month, the Turkish Banking Regulatory and Supervisory Authority (BRSA) published a new regulation on the fees and commissions which banks, card issuers and other financial institutions may charge consumers in connection with loans, financial products, and other services. The regulation applies to agreements entered into after October 3, as well as transactions completed after October 3 under existing agreements.
The regulation does not apply to insurance and securities-related services and products offered to consumers or to non-consumer products and services.
Overview of the Regulation
- The regulation contains an exhaustive list of products and services (listed below) for which a fee or commission may be charged to consumers, as well as the types of permissible fees and commissions. BRSA approval is required for any new fee or commission for new or existing products and services. The BRSA has the right to amend the list at any time.
- Customer approval must be obtained before providing any product or service for which a fee or commission is charged.
- Any fee increase more than 1.2 times an increase in the consumer price index in any given calendar year for products or services provided on an ongoing basis requires advance consumer consent. For other increases, the consumer must be notified at least 30 days in advance. Consumers are entitled to cancel the delivery of products and services within 15 days of receiving notification of an increased fee.
- Paper agreements with consumers must include a handwritten statement by the consumer that he/she has received a copy of the duly signed agreement.
- Institutions offering consumer loans and mortgage loans can only request an arrangement fee, which cannot be higher than 0.5% of the loan's principal.
- Credit card issuers must offer a membership fee-free credit card to their customers.
- Consumers cannot be charged an annual card membership fee for bank cards and virtual cards.
The fees and commissions Turkish banks and other financial institutions charge for consumer transactions have been the center of vigorous debate for some time now. Many consumers have litigated the fees they have paid for their transactions, creating uncertainty in the Turkish banking market. The BRSA has now delivered the last word, bringing clarity to the market. This is generally a positive development for both banks and consumers -- banks now know what they can demand from consumers, and consumers know the costs associated with financial products and services, including bank and credit card fees.