The critics of the recent legislation regarding consumer lending have succeeded in their efforts – if the President signs the new law on consumer loans we will soon see stricter regulation of entities providing consumer lending services. The law will stipulate a number of new requirements.
The existing consumer loan providers will have to radically review their contracts, and some of them will be forced to redefine their entire business policy. The new, stricter law will apply to all the loans except business loans, which means that it will govern also the payday loans up to five thousand crowns, and the housing loans.
Furthermore, the licensing rules applicable to consumer loan providers are going to change as well. The non-bank providers of consumer loans will no longer be required to have only the professional notifiable trade permit – they will need to apply for a licence. The licences will be granted by the Czech National Bank by means of registering the applicant in the Register of Authorised Providers for the period of 5 years (which may later be extended). Another new requirement – which may well be impossible to meet, particularly for the small providers – stipulates that the initial capital must amount at least to twenty million crowns. As the changes are going to affect the conditions specified both for the loan providers and for the related contracts (for example the early repayment clauses), we recommend that particularly the non-bank providers start preparing and optimising their business as soon as possible to avoid any unpleasant surprises at the extent of the changes imposed on them.
