Changes in the consumer loans legislation FAQ
CNB licence acquisition
- conditions for granting the permission to activity see §10
- the fulfilment of conditions for obtaining the licence from the CNB see §15
- professional competence see §60 and the CNB internal prescription §9
The above summarizes the main requirements as defined by the new law on the consumer loan to obtain the licence of the CNB. Generally, it can be summarized that the basic rule is provable compliance with clear boundaries, and in particular
- communicate with the consumer may only a competent and trustworthy person
- provide loans may only an entity associated by work and by statute only with trusted and competent persons
- the provider has the demonstrably set out internal procedures and standards leading towards compliance with legal rules and standards of the Czech Republic and the EU, i.e. the proper administrative procedures, the protection of personal data of clients, the remuneration of persons without dependence on measurable performance associated with motivation to borrow, the security of IT technologies, risk management, the organization of competence etc.
- clearly set out procedures and compliance with standards connected with assessment of creditworthiness of applicants
- the rules for claims enforcement, the rules for internal and external communication
- the rules for the external employees (intermediaries) control guaranteeing compliance with legal rules and standards of the CR and the EU when offering loans
Commentary: In summary – it is necessary to have written internal rules (standards) which clearly define the powers and responsibilities of individual persons. These persons must be trustworthy and technically competent. You as a company must ensure permanents quality and safety. The proof in obtaining the authorization from the CNB can be either by evidence of the obtained certification from the accredited person or by passing of all copies of the CNB standards. In documenting the standards a CNB employee will assess their adequacy and compliance with the laws and standards of the CR and the EU. Professional competence is supported by the graduation examination diploma or by evidence of higher education achievement + by a confirmation of passing a professional competence examination. The examination is organized merely by an accredited subject of the CNB.
Changes in contracts
Commentary: The changes in contracts are radical and we could here list the half sections of the law. To put it simply, the current contracts should be almost completely reworked. The same attention should also be paid to the control of the process of application and approval / rejection of applications for the consumer loans. Also, do not forget to make the complete audit of the text and content of your websites.
The main changes are
- sanctions agreement – the maximum sanction amount - 0,1% per day + maximum amount of total costs 70% of the principal
- the obligation to deliver contractual documents to the consumer in print form or on another durable medium
- provably to demonstrate creditworthiness of the applicant for a loan
- in case of breach of the conditions laid down by law the contract of the loan agreement becomes completely invalid
Main areas of sanctions – up to 20 million CZK
Commentary: Definitions of the sanctions amount and areas of violation are dealt with in §153 further on.
- the sanctions range from 0 - 20 million CZK, the amount is decided by the CNB agent
- the CNB may perform a check up to 5 years back, see §159
- the provider is responsible for all his/her workers i.e. intermediaries as well
- the breach of contractual agreements means the overall invalidity