Spectator on facebook

Spectator on facebook

New law clamps down on non-banking financial institutions

Non-banking institutions will have to adjust to tougher regulations governing their business practices following an amendment to the Civil Code that was drafted by Smer MPs and approved by parliament on April 1. The legislation is aimed at protecting consumers against the usurious practices of some of the non-banking institutions. The proposal stipulates that it will be necessary to define usury and other illicit practices. If such practices are found with respect to a signed contract it can be cancelled. The amendment is also set to protect people from losing money due to sequenced or rollover loans. The amendment also aims to introduce a standard-size font for consumer-loans contracts, while also setting a limit on interest rates on cashless loans at a maximum of twice the average interest rate used by banks. Moreover, the legislation should prevent distraintments of real estate in the case of financial claims of up to €2,000. “We want to prevent distrainers from selling somebody's house or flat for a debt of some €1,000,” the TASR newswire was told by Smer MP Anton Martvoň who was involved in drafting the amendment. According to the approved document, bailiffs won’t be able to carry out a distraint order by selling real estate at which the debtor has his or her permanent or temporary residence. They will be allowed to do so only if the debtor faces a number of unpaid debts that exceed €2,000.

Non-banking institutions will have to adjust to tougher regulations governing their business practices following an amendment to the Civil Code that was drafted by Smer MPs and approved by parliament on April 1.

The legislation is aimed at protecting consumers against the usurious practices of some of the non-banking institutions. The proposal stipulates that it will be necessary to define usury and other illicit practices. If such practices are found with respect to a signed contract it can be cancelled. The amendment is also set to protect people from losing money due to sequenced or rollover loans.

The amendment also aims to introduce a standard-size font for consumer-loans contracts, while also setting a limit on interest rates on cashless loans at a maximum of twice the average interest rate used by banks.

Moreover, the legislation should prevent distraintments of real estate in the case of financial claims of up to €2,000. “We want to prevent distrainers from selling somebody's house or flat for a debt of some €1,000,” the TASR newswire was told by Smer MP Anton Martvoň who was involved in drafting the amendment. According to the approved document, bailiffs won’t be able to carry out a distraint order by selling real estate at which the debtor has his or her permanent or temporary residence. They will be allowed to do so only if the debtor faces a number of unpaid debts that exceed €2,000.

The changes concerning distraint orders will come in effect as of June.

Non-banking institutions reacted negatively to this news, with their association claiming that the bill will harm consumers instead of protecting them.

“This amendment may have the very opposite effect than intended by MPs ... as ordinary people will turn to companies in the grey and black zones of the economy instead, where no laws are observed,” Ivan Kahanec, executive secretary of the Association of Consumer Loan Providers (APSU), told TASR.

On the other hand, Maroš Ovčiarik of the website Finančná Hitparáda believes that the market involving non-banking products does indeed need tougher regulation. “Of course, the regulation needs to be carried out in a sensitive manner, so that it doesn’t restrict the accessibility of loans for people who were denied loans by banks, but the risk that they fail to pay the loan isn’t so high,” he said.

(Source: TASR)
Compiled by Zuzana Vilikovská from press reports
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.

The processing of personal data is subject to our Privacy Policy and the Cookie Policy. Before submitting your e-mail address, please make sure to acquaint yourself with these documents.

Top stories

Kuciak did not even have a computer as a child and he grew up to be an analyst

A village boy who angered Marian Kocner. A profile of Ján Kuciak, who recently received the White Crow award in memoriam.

Ján Kuciak

Lajčák considers resignation if the migration compact is rejected

The foreign affairs minister also admitted to some disputes with PM Robert Fico.

Foreign Affairs Minister Miroslav Lajčák

How to cope with waste

Slovakia lags behind in recycling and reducing waste, but examples of other countries, particularly the Netherlands, are helping Slovakia implement strategies to reduce waste.

Roughly 67 percent of communal waste ended up at landfills in Slovakia, while only 23 percent was recycled.

Europe might not be just an innocent victim

While real estate bubbles in the US, Greece and Spain were partial causes of global crisis, irresponsible lending was also rife in places you hear little about.