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Consumer Campaign READ BEFORE YOU SIGN !

Consumer Campaign READ BEFORE YOU SIGN !. Czech Consumer Association Libor Dupal. Starting points (1) More and more citizens in the country use consumer credits, financial loans, mortgages etc.;

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Consumer Campaign READ BEFORE YOU SIGN !

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  1. Consumer Campaign READ BEFORE YOU SIGN ! Czech Consumer Association Libor Dupal March 2006, L. Dupal

  2. Starting points (1) • More and more citizens in the country use consumer credits, financial loans, mortgages etc.; • The financial servicesproducts are preferably used by such households whose allowance and budgets are relatively low; March 2006, L. Dupal

  3. 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 contractualconditions. March 2006, L. Dupal

  4. Priorities of CCA • Participate on expert basisasa 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). March 2006, L. Dupal

  5. Consumer borrowingin the CzR • What were the trends in Czechia in2002-2004 ? March 2006, L. Dupal

  6. Growth in Czech consumer credit March 2006, L. Dupal

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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 mid-2004.” Czech National Bank, Financial Stability Report 2004 March 2006, L. Dupal

  12. 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) March 2006, L. Dupal

  13. 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 March 2006, L. Dupal

  14. 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). March 2006, L. Dupal

  15. Examples of Performing Campaign March 2006, L. Dupal

  16. Examples of Performing Campaign March 2006, L. Dupal

  17. Examples of Performing Campaign TV SPOT March 2006, L. Dupal

  18. Examples of Performing Campaign • Booklet – detailed information on consumer contracts in financial sphere (credit, loans, mortgage …); • Special issue of our consumer newspapers Konzument-Test. March 2006, L. Dupal

  19. NEW CONSUMER CREDIT DIRECTIVE • LOOKING FOR THE POSITION OF THE CZECH CONSUMER ASSOCIATION March 2006, L. Dupal

  20. 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

  21. 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

  22. Thank you for your attention ! Libor Dupal Sdružení českých spotřebitelů e-mail: dupal@regio.cz www.regio.cz/spotrebitel March 2006, L. Dupal

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