Although the provision of consumer credit and its legal regulation usually enjoys media interest, the latest amendment to the Consumer Credit Act (Act No. 145/2010 Coll., as amended) entered into force without significant attention. This amendment was to have been adopted during the previous year and was to be effective from 1 January 2013. However, the legislative process was delayed and the Act was published in the Collection only on 25 February 2013 and immediately entered into force.

Let us recall that consumer credit means deferred payment, a loan, credit or other similar financial service provided or promised to a consumer by a creditor or intermediary.

The amendment clarifies the statutory regulation in the area of providing information to consumers before concluding a contract. It is further newly expressly stipulated that a creditor shall provide consumer credit only if, after assessing the creditworthiness of the consumer with professional care, it is clear that the consumer will be able to repay the consumer credit; otherwise, the contract in which consumer credit is agreed is invalid.

In Section 18, the legislator surprisingly prohibited the use of a bill of exchange or cheque for the repayment or securing of consumer credit. At the same time, it stipulated that the creditor and intermediary are jointly and severally liable to the consumer for damage caused by breach of the said obligation. The most significant change is represented by Section 18a, according to which the security for consumer credit must not be in a manifestly disproportionate relation to the value of the secured claim. We consider this provision to be unsystematic and disrespectful of the function of security instruments. It opens up scope for considerations as to what is in manifest disproportion to the value. Thus, for example, in the case of security by a charge over immovable property, the principal and the valuation of the immovable property will be compared, which will very often be in disproportion, and the courts will have to determine whether the disproportion is already manifestly evident. Also entirely new is the provision that when offering, negotiating or intermediating consumer credit by telephone, numbers with higher than standard charges may not be used for access to services.

Section 20 of the Act extends the number of administrative offences (správní delikty) that both creditors and intermediaries may commit in activities regulated by the Act in question, and the maximum rates of fines are also increased up to CZK 20,000,000.

From 1 January 2014, a further amendment to the Consumer Credit Act will become effective, according to which, in the event that part of the contract is determined by reference to general terms and conditions, the creditor must attach to the contract only such part of the terms and conditions as relates to the contract being concluded. Furthermore, it shall apply that the font size used in the terms and conditions must not be smaller than the font in the contract.

Petr Kočí

Law Office Mašek, Kočí, Aujezdský www.e-Advokacie.cz – on-line legal counselling

This text was originally prepared by the law office Mašek, Kočí, Aujezdský in cooperation with the civic association Association for Electronic Commerce (APEK) as legal circular No. 3/2013 intended for members of this association.

This text was translated from Czech to English using an AI translator.