The Decree to amend the Decree on the Supervision of Market Conduct FMSA as a result of the implementation of the Consumer Credit Directive (2008/48/EC) ("Decree") was published in the Bulletin of Acts and Decrees on 1 June 2011. The Decree entered into force on 2 June 2011. In addition to amendments to the Decree on Supervision of Market Conduct FMSA ("DSMC"), the Decree contains amendments to the Decree on Administrative Penalties Financial Sector and the Costs of Credits Decree.
Additional amendments were made with respect to the earlier published consultation version of the amending decree ("Consultation Version Decree"). We highlight the most important changes below.
Standard information to be included in advertising
Any credit advertisements related to securities-backed credit which refer to the interest rate or any other information concerning the cost of securities-backed credit must comply with certain information requirements other than those required for credit advertisements related to other types of credit. For example, credit advertisements about securities-backed credit do not have to include information on the annual rate of charge, but they must include a warning that the credit limit depends on the value of the financial instruments serving as collateral.
Furthermore, a credit intermediary must include additional information in any credit advertisement, in addition to the standard information the offeror of credit is already obliged to include. For example, a credit intermediary must state that his advice is based on an objective analysis.
The requirement to include the credit warning "Watch out! Borrowing Money Costs Money" (Let op! Geld lenen kost geld) in any credit advertisement, other than those related to mortgages, remains valid. The question arises whether this is in accordance with the Consumer Credit Directive ("Directive"), which indicates that national rules deviating from the harmonised provisions may not be imposed.
The credit prospectus is replaced by the Standard European Consumer Credit Information ("SECCI"). The SECCI's required content, form and lay-out are set out in detail in:
- Annex E of the DSMC with regard to credit in the form of a permitted overdraft;
- Annex F of the DSMC with regard to securities-backed credit; and
- Annex D of the DSMC with regard to types of credit, other than (a) or (b).
Annex D and Annex E contain the same information as included in Annex II and Annex III of the Directive.
The Directive does not prescribe that pre-contractual information on securities-backed credit must comply with any requirements. However, legislators consider that in the case of securities-backed credit, it is important that standardised pre-contractual information be made available to consumers. With this information, it is easier for consumers to compare different offerors of securities-backed credit. The standard information on securities-backed credit which must be provided to consumers is set out in Annex F.
There has been another change as a result of the above. The offerors of securities-backed credit must provide pre-contractual information to consumers. Before the Decree came into effect, these offerors were exempt from the requirement to provide a credit prospectus. This means that the offerors of securities-backed credit must provide consumers with the pre-contractual information as set out in Annex F to the DSMC.
The maximum credit fee with transactions involving an amount of credit more than EUR 40,000
The first legislative proposal for the implementation of the Directive contained the proposed deletion of the provision that the Consumer Credit Act does not apply to transactions involving an amount of credit of more than EUR 40,000. During the legislative process, this proposal was rejected. As a result, the Consumer Credit Act is still not applicable to transactions involving an amount of credit of more than EUR 40,000. However, this does not mean that these types of credit transactions are not subject to requirements regarding the maximum credit fee amount. As set out in section 4:35 of the Financial Markets Supervision Act, rules with regard to the maximum amount of the credit fee allowed can be set by governmental decree. Due to the introduction of section 115a DSMC, a credit offeror may not charge a higher credit fee than that allowed under the Cost of Credits Decree. Thus, the Costs of Credits Decree is also applicable to transactions involving an amount of credit of more than EUR 40,000.