Financial Crime World

Credit Interest Rates and Charges Take Center Stage as Regulations Tighten

In a move aimed at protecting consumers, Slovenian authorities have implemented stricter regulations governing credit interest rates and charges. The changes, which come into effect on [date], aim to provide greater transparency and fairness in the lending process.

New Rules for Lenders

  • Lenders must obtain a licence from the relevant authorities before providing consumer credit services.
  • This applies to both online and offline lenders, ensuring that all borrowers are protected by similar regulations.

Changes to Credit Agreements

  • Borrowers will now have more flexibility in canceling their agreements, with lenders required to provide clear information on the terms and conditions of repayment.
  • Lenders must also notify borrowers of any changes to interest rates or fees.
  • Stricter guidelines for early repayment allow borrowers to settle their debts without penalty.

Maximum Permissible Effective Interest Rate

The regulations have set a maximum permissible effective interest rate (MP-EIR) of [X]% per annum, which lenders are not permitted to exceed. This move aims to prevent excessive borrowing costs and ensure that consumers are treated fairly.

Background Checks

  • Lenders will need to conduct thorough background checks on borrowers, including reviews of income and expenditure data.
  • This information will be obtained from personal databases held by other controllers.

Sources of Funds for Loans

Online lenders in Slovenia typically use lender-raised funds and deposits as their primary source of funding. However, with the growth of online lending, it is expected that providers will also explore securitization and peer-to-peer lending options.

Payment Processors Under Scrutiny

  • Payment processors must ensure safe and secure operations when using existing or new payment rails.
  • The regulations cover cross-border payments and remittances, which are governed by the Cross-Border Payments Regulation (CBPR) and the Single Euro Payments Area (SEPA) regulation.

Fund Administrators Regulated

Investment funds in Slovenia are divided into undertakings for collective investment (UCITS) and alternative investment funds (AIFs). Fund administrators of both types of funds are regulated, with AIF administrators required to obtain a valid licence from the Securities Market Agency (ATVP).

The regulations also cover contractual terms between fund advisers and administrators, which must be subject to industry custom and general rules of contract law.

Conclusion

These changes aim to create a more level playing field for lenders and borrowers alike, ensuring that all parties are treated fairly and transparently. As the lending landscape continues to evolve, it is essential that regulatory bodies remain vigilant in protecting consumers’ interests.