TNBiz (TNBiz)
Personal finance  |  August 22, 2012 13:20:05

The government has approved an amendment to the Consumer Credit


PRAGUE (MEDIAFAX) - Nečasův cabinet on Wednesday approved an amendment to the law on consumer credit, said Deputy Prime Minister Karolina Peake (PEOPLE). Draft should ensure the same conditions for calculating the annual percentage rate of charge (APR) in all EU countries and facilitate cross-border offerings and demanded consumer loans.

"The proposal responds to the findings from practice and some unfair practices occurring in the consumer credit market in the Czech Republic takes place. Proposed changes aim is mainly to empower consumers and the principle of responsible lending," said Finance Minister Miroslav Kalousek (TOP 09).

It also responds to certain practices in the leasing contracts is not anchored nor right nor the obligation to buy the tenant hired thing at the end of the lease, but in the contract is the mere possibility of the landlord hired this thing to offer tenants to purchase.

Treatment also strengthens the principle of responsible lending and consumer protection practices of the creditor in advance allows for the possibility that the borrower may not be able to repay the loan granted and fails to secure the loan. The creditor would in assessing creditworthiness must take into account both the current situation of the client, including its income and expenditure, and facts which may be based on information available at the time before the contract is concluded with a high degree of probability, expected (for example, the expected revenue from inheritance of the present proceedings, sale of real estate, cars, insurance benefits, etc.)..

The draft also clarifies some definitions, for example, provides that liability creditor must apply for a formal legal act, not only on the basis of informal oral promise or assurance.In cases where the broker fee paid directly to the consumer, must be included in the contract and remuneration arrangements for intermediaries. Sanctions for non-compliance with requirements under draft form is void this contract.

The Act introduces the obligation for the consumer to get a contract and could withdraw without any penalty from the contract of consumer credit if, in a period of 14 days from the conclusion of this contract not on the basis for the negotiation of consumer credit.

"This rule should be formulated to protect both consumers exposed to unfair practices of some brokers who act with a single purpose in mind - to ensure each commission and any other payments from the consumer without being in any way acted in his interest, so honest broker, who in the interest of consumers consumer loan actually negotiate andconsumer attempts to avoid paying commissions withdrawal from the contract, "mentioned explanatory report.

With regard to the amendment of certain practices in addition to withdrawal also subsequent cancellation of the additional services, such as life insurance.

The amendment also prohibits the use of bills of exchange or a check to pay or to secure repayment of consumer credit. For any damage caused to consumers violation of this provision shall be jointly and severally creditor mediator and consumer credit.

The draft also responds to the practices in which lenders require borrowers collateral in an amount that is significant in proportion to the value of the claim.

Treatment should also reduce situations where the consumer is in the offering, negotiating or arranging a loan referred to the telephone numbers that are charged such high rates for calls that cost thousands, sometimes tens of thousands of crowns.

For violating the law will be able to supervisors, who are Czech National Bank and the Czech Trade Inspection, impose a fine of up to 20 million. Consumers will be able to assert their rights in the Financial Arbitrator.

The amendment should be approved by the House, Senate and presidential signature to take effect first January 2013.

Miroslav Kyncl, Jan Kálal, kalal@mediafax.cz

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