The new consumer credit law (Legislative Decree No. 141/2010) entered into force on June 1, 2011 and introduced important innovations in favor of greater consumer protection.
Consumer credit is defined as the contract whereby a lending institution (the bank) grants or agrees to grant a consumer a credit in the form of deferred payment, loan or other financial facilitation. The definition includes: finalized Newsmags, independent or unfinished Newsmags (such as personal Newsmags), revolving credit facilities (often linked to a revolving card) and salary-backed loans.
The first innovation introduced by the consumer credit legislation concerns the Taeg (Annual Global Effective Rate), which indicates the total cost of the loan. From the entry into force of the new law, the Taeg must necessarily include all the expenses related to the financing: the interests; the costs of preliminary investigation and opening of the credit file; the costs of collecting repayments and collecting installments (if provided); the expenses for insurance or guarantees imposed by the creditor (aimed at assuring the reimbursement – total or partial – of the credit in the event of death, disability, infirmity or unemployment of the debtor of the applicant); the cost of the mediation activity possibly carried out by a third party; the costs of managing the current account opened to pay the installments (if the opening of the account is foreseen as obligatory) and, finally, all the expenses foreseen as per the contract.
With a view to promoting greater transparency in consumer credit, Newsmags’s advertisements must also provide all the information necessary for consumers to make their choice in an informed and reasoned manner. Very often it happens, in fact, that the term “interest-free loan” refers only to the Tan (Nominal Annual Rate) and not to the real cost of the loan. In this sense, advertising communications must clearly and clearly show the Taeg, the duration of the loan, the amount of the monthly installment and the total amount of the credit (including expenses and interest).
Another novelty provided for by the consumer credit law is the document entitled ” Basic European information on consumer credit “, also called the IEBCC form or SECCI form (from the Standard European Consumer Credit Information). Before signing the loan agreement, the bank is obliged to deliver this document to the customer. It contains the loan conditions offered to the customer, the duration of the contract, the interest rate applied, the TAEG, the number and amount of the installments, the consequences in the event of non-payment, the conditions for exercise the right of withdrawal, the existence of the right to early repayment and, finally, the consumer’s right to have a complete copy of the contract before signing the same.
The IEBCC module replaced the information sheets that were required by the previous legislation. Unlike the latter, the IEBCC module does not contain valid information for the general public, but it is a personalized document, which is issued only at the time of the loan request by the customer.
The new legislation on consumer credit recognizes the consumer the right to withdraw from the financing contract within 14 days of the stipulation, in any case and without having to specify the motivation. Previously, the right of withdrawal was only possible if the loan contract had been stipulated at a distance or outside the seller’s business premises.
To withdraw from the consumer credit agreement, it is necessary to proceed in the manner specified in the contract, sending a registered letter to the bank / financial institution. If the loan has already been disbursed, the consumer will have 30 days time to return the capital and the interest accrued up to that moment as well as any taxes due. In addition to these sums, the consumer cannot be asked for another payment, either as a penalty or otherwise.
In the case of a finalized loan (ie linked to the purchase of a specific good or service), if the purchased good has never been delivered, the consumer has the right to terminate the contract, which must be requested by sending a letter of mass in default. In this case, the financial company must return the installments already paid and, then, make claims against the retailer or retailer.
The right to withdraw is also valid for all ancillary service contracts, which are linked to the loan previously requested (such as, for example, any insurance taken out to cover the credit).