The Czech Republic has adopted new legislation
concerning the provision and conditions of consumer credits. The
legislation (the Czech Consumer Credit Act No. 321/2001 Coll.) is
effective from 1 January 2002 and is based on the Directive of the
Council of European Communities No. 87/102/EEC on harmonisation of
the laws and additional legislation of member states in respect of
consumer credit, as amended.
The Act defines what is consumer credit and also
defines substantial information that must be contained in an
agreement on the provision of consumer credit.
A creditor providing consumer credit must
stipulate, among other requirements, the so-called "annual
percentage charge concerning the expenses connected with provision
of consumer credit" (RPSN). The RPSN must be calculated in
accordance with the formula provided under the law and must be
published by the creditor. The RPSN may only be changed if an
agreement on the provision of a consumer credit provides for it and
also provides for the conditions on the basis of which RPSN can be
changed and the creditor informs the consumer about it.
The Czech Consumer Credit Act provides for the
right of the consumer to repay an amount of provided consumer
credit prior to the agreed payment date and in case he/she repays
the provided credit prior to such date he/she is entitled to have
the fees and the interest paid in connection with the provided
credit discounted proportionately.
Besides the calculation and level of the RPSN and
early repayment right, consumer credit agreements must also
- the maximum amount of provided credit, stipulation of the
amount of instalments, the number of instalments and a time
schedule for the payment of instalments,
- stipulation of the amount of the fees charged by a creditor in
connection with the provision of a credit, if it is not possible to
stipulate a formula on the basis of which such fees would be
- conditions on the basis of which an agreement can be terminated
prior to the agreed term, and
- the method of repayment of the credit, etc.
More importantly the Act provides that if an
agreement on the provision of consumer credit does not contain all
the prescribed information and conditions, such credit would still
be considered to be consumer credit and a creditor would only be
entitled to charge interest equal to the official interest rate as
announced by the Czech National Bank at the time of the conclusion
of the agreement on the provision of consumer credit.
The state supervision concerning adherence to the
Czech Consumer Credit Act shall be exercised by the Czech Trade
Inspection (Ceska obchodni inspekce) which is entitled to impose
sanctions, including financial penalties against those providers of
consumer credit who do not comply with the terms of the new
For further information please contact Michal Smrek
at email@example.com or on +420 2 21098000.