Banking News

Consumer Credit Law: New Rules

October 21, 2015 - Benjamin Manz

The Federal Council has made alterations to the Swiss Consumer Credit Law. January 1, 2016, will see the implementation of a number of changes aimed at better protecting customers. The new rules build on regulations limiting the maximum interest rates for consumer credit (with effect from July 1, 2016).

Here is an overview of changes to the consumer credit law:

  • So far, loans have been provided with to a cooling-off period of 7 days. The new rules extend this cooling-off period to 14 days. This gives the borrower a two-week period during which they can cancel their loan application. Lenders are not obligated to make borrowers wait for the full two weeks before accessing a loan, but doing so is easier from an administrative perspective.
  • Consumers will be liable to compensate lenders if the borrowed assets (a leased car, for example) are misappropriated during the cancellation period.
  • The aggressive advertisement of consumer loans will be illegal as of 2016. Contraventions will be punished with fines as high as 100,000 francs. The obvious question is: what forms of advertising would be considered “aggressive”? The rules place responsibility for the definition of “aggressive advertising” with the lending sector iself. The Federal Council will interfere if the self-regulatory measures are insufficient. Only time will tell if these measures are adequate.
  • Credit checks should be performed more rigorously than in the past. This should help to prevent lenders from taking on more debt than they can manage. If doubts about an applicant’s creditworthiness exist, lenders can request that the applicant provide their debt collection register report, proof of salary and other official or private documents. There is room for question as to how “doubts” about an applicant’s creditworthiness will be defined. Because of this, the rule is not likely to have a major impact on the approval process.
  • Only short-term loans which are repaid in 3 months or less will not be affected by changes to consumer credit laws from January 1, 2016. Until now, loans repaid within 1 year in a maximum of 4 installments were also exempted from consumer credit laws.

The team

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Expert Benjamin Manz
Benjamin Manz is CEO of and an independent expert on banking and finance.