An amendment to the Act no. 129/2010 Coll. on consumer loans and other loans for consumers and on change and amendment of some other acts, as amended (hereinafter referred to as the “Amendment”), which introduces several fundamental changes in the area of consumer loans provision, has become effective on April 1, 2015. New legal regulation should contribute to greater transparency, increase in supervision over the market of consumer loans providers and enhancement of consumer protection.
In consequence of list of creditors’ implementation, the Amendment should have a positive effect on society awareness. On the other hand, introduction of more strict qualification criteria for subjects applying for the license for provision of consumer loans, as well as increase of their administrative burden are likely to have negative impact on business environment. According to preliminary estimates, the number of nonbank companies (i.e. providers of consumer loans not being banks) shall decrease from approximately 200 to maximum 50.
Until the Amendment adoption, the nonbank companies were obliged to register in the so called creditors register maintained by the National Bank of the SlovakRepublic(hereinafter referred to as the “NBS”). In terms of the new legal regulation, solely the subjects granted a license for such activity by the NBS shall be entitled to provide consumer loans. Should a subject not disposing of such license conclude a contract on consumer loan, such contract will be considered null and void.
License applicants will be obliged to fulfil numerous conditions, such as conducting business in the form of a joint-stock company or a limited liability company, establishment of a supervisory board, payment of monetary contribution to the registered capital in the minimal amount of EUR 500,000, requirements for personal constitution (mainly specific qualifications of statutory bodies, members of the supervisory board and of an internal control body), creation of a system for examination of consumers’ solvency, placement of the registered seat or a branch office in the Slovak Republic and creation of a reclamation order. The mentioned conditions shall not apply to banks, since these provide loans on the basis of a bank license. The Amendment distinguishes creditors providing consumer loans in a limited extent – in total volume not exceeding EUR 10,000 per 12 months. A simplified license process shall apply to these subjects (especially an absence of obligation to maintain the minimal registered capital in the amount of EUR 500,000). Individuals are entitled to apply for such license as well in case of provision of loans in the limited extent; specific license conditions shall apply in this case.
The Amendment also introduces a license process for other creditors providing loans and credits other than consumer ones to the consumers. Conditions for granting of the license for performance of these activities are determined for these subjects as well, including form of limited liability company or joint-stock company and the registered capital in the minimal amount of EUR 100,000.
Effective as of September 30, 2015, creditors will also be obliged to examine at least one electronic registry of consumer loans data (registers will be non-public) for the purpose of appraisal of consumer’s ability to repay the loan. Simultaneously, the creditors will be obliged to provide identification data about each consumer they concluded a contract on consumer loan with, to at least one such register. Moreover, the Amendment introduces a list of creditors and other creditors, who acquired the license for provision of consumer loans and license of other creditors, which shall be published on NBS website. Publication of this information shall have declarative function only.
Under the so far valid legal regulation, supervision over provision of consumer loans was performed by the Slovak Business Inspection. This competence has been forwarded to the NBS. In case NBS discovers any failures in creditors’ activities or breach of the respective legislation, it is entitled to impose a fine up to the amount of EUR 140,000, revoke the license or impose other precautions or limitations.
Creditors providing consumer loans, credits and loans under the current, no longer effective legal regulation shall be entitled to provide them until August 31, 2015 at the latest. In case they fail to apply for issuance of the license or the license for other creditor in terms of the Amendment within May 31, 2015, their registration in the registry of creditors shall automatically cease on August 31, 2015.
The author of the article is Lenka Bogárová, junior lawyer in Konečná & Zacha's office in Bratislava