Download NEW CONSUMER CREDIT DIRECTIVE CCA prefer

Consumer Campaign
READ BEFORE YOU SIGN !
Czech Consumer Association
Libor Dupal
March 2006, L. Dupal
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Starting points (1)
• More and more citizens in the country use
consumer credits, financial loans,
mortgages etc.;
• The financial services products are
preferably used by such households whose
allowance and budgets are relatively low;
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Starting points (2)
• Consumer is generally a weaker party in
the contractual relation;
• Consumers do not have necessary
theoretical knowledge or practical
experience for concluding contracts;
• Consumers are not vigilant and cautious
enough; they do not read attentively the
contractual conditions.
March 2006, L. Dupal
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Priorities of CCA
• Participate on expert basis as a defender of
consumer interests and rights;
• Develop consumer protection on the basis of
PREVENTION (incl. approval process of laws,
development of standards etc.);
• Provide assistance and advise with special
attention paid to the disabled, the elderlies etc.;
• Provide education and training (CCA accredited
by the Ministry of Education).
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Consumer borrowing in the CzR
• What were the trends in
Czechia in 2002-2004 ?
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Growth in Czech consumer credit
17.6%
80
13.6%
70
60
50
40
30
€1.64 bn
€1.88 bn
€2.27 bn
2003
2004
20
10
0
2002
Source: CNB and Credit Counselling Service
(Note: Excludes non-bank household lending)
March 2006, L. Dupal
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Increase of mortgage
• During these 2 years the mortgage
increased 2.5 times
from 51 bn to 120 bn CzK
( 1.7 bn to 4 bn).
Source: CNB and Credit Counselling Service
March 2006, L. Dupal
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Household lending
• During these 2 years the
mortgage increased 2.5 times
from 51 bn to 120 bn CzK
( 1.7 bn to 4 bn).
Source: CNB and Credit Counselling Service
March 2006, L. Dupal
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Household lending
• Growth in loans to non-financial corporations:
+7.5 %
• Growth in loans to households:
+34.4 %
of which
• Mortgages:
+52.8 %
• Building society loans:
+32.4 %
• Consumer credit:
+13.7 %
• Loans to households: 28.0 % of bank loans at end
2004 compared with 22.2 % at end 2003
Source: CNB and Credit Counselling Service
March 2006, L. Dupal
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Concerns over indebtedness
• “The uncertainties and potential risks
include fast growth in lending to
households, which is leading to a
gradual increase in their indebtedness.
Growth in mortgage loans is particularly
sharp. The interest burden on
households is also rising.”
Czech National Bank, Annual Report 2004
March 2006, L. Dupal
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Consumer loan credit quality
• “In the case of consumer credit,
households’ discipline as regards
repaying loans on time and in full is
significantly worse….. Their quality has
steadily deteriorated, and the share of
classified consumer loans in total
consumer loans exceeded 12% in mid2004.”
Czech National Bank, Financial Stability Report 2004
March 2006, L. Dupal
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Assessment based on domestic
data
• Grounds for concern:
• High growth rate relative to wages & salaries / GDP
• High growth relative to other types of lending
• Consumer inexperience with credit / risk of debt?
• Grounds for reassurance:
• Growth from a very low base
• Strongest growth - mortgages
• Main lenders - Int’l banks & finance companies with
significant experience from home markets
• Improving infrastructure (e.g. credit registers)
(Source: Credit Counselling Service)
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Objectives of the Campaign
• Open publicly the issue of the risks;
• Develop awareness raising outputs to
warn consumers against imprudence;
• Develop information and education
campaign
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Forms of Performing Campaign
• A seminar in the Czech Parliament and
others in various regions;
• Booklets and newspapers (conclusion of
contracts);
• Awareness raising spots on TV and
radios;
• Advertisements published in newspapers;
• Participation in discussions (TV, radios).
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Examples of Performing Campaign
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Examples of Performing Campaign
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Examples of Performing Campaign
TV SPOT
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Examples of Performing Campaign
•
•
Booklet – detailed information on
consumer contracts in financial
sphere (credit, loans, mortgage …);
Special issue of our consumer
newspapers Konzument-Test.
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NEW CONSUMER CREDIT DIRECTIVE
• LOOKING FOR THE POSITION OF THE
CZECH CONSUMER ASSOCIATION
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NEW CONSUMER CREDIT DIRECTIVE
CCA prefer (1)
• Mortgage to be directly covered by the
new Act;
• APR ideally should be calculated in a
uniform manner
– incorporating all the cost elements linked to
the credit contract;
• Appropriate pre-contractual information
should be provided;
March 2006, L. Dupal
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NEW CONSUMER CREDIT DIRECTIVE
CCA prefer (2)
• Maximum rates should not be necessarilly
included;
• Possibility for consumers to withdraw from the
credit agreement within 14 days;
• Possibility for consumers to repay their credit
earlier; (compensation to the creditor?)
• Total harmonization should relate just “core
issues”; (mutual recognition issue).
March 2006, L. Dupal
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Thank you for your attention !
Libor Dupal
Sdružení českých spotřebitelů
e-mail: [email protected]
www.regio.cz/spotrebitel
March 2006, L. Dupal
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