In the third part of the series on regulation in consulting practice, we will focus on the distribution (intermediation) of loans, specifically on the Independent Intermediary.
Who is an intermediary in general?
It is the person who, as an entrepreneur, mediates consumer credit in the name and on behalf of the provider or on behalf of and on behalf of the consumer.
Who is an independent intermediary (hereinafter referred to as the SZ)?
In the vast majority of cases, these will be companies operating in the financial market that provide facilities for end advisors. For these companies, even though a natural person can also be an independent intermediary, the new law probably means the biggest change of all those to whom it applies.
The SZ may intermediate consumer credits on the basis of a written contract for one or more providers or on the basis of a consumer credit intermediation agreement concluded with a consumer.
The SZ can carry out its activities if it is registered with the CNB, where it submits an electronic application. In addition to the requirements set out in the Administrative Procedure Code, the application must also contain information on the fulfilment of the conditions for the activity of an independent intermediary set by the Administrative Act.
Conditions required for submitting an application for registration
Throughout its activity, the SZ must be insured in the event of an obligation to compensate the consumer for damage caused by a breach of any of the obligations stipulated by law. The indemnity limit must be at least €460,000 for each individual event and a total of €750,000 for all claims per calendar year. The agreed deductible may not exceed the higher of the limits of CZK 5,000 or 1% of the agreed limit of insurance benefits.
The SZ, including its controlling person, must meet the conditions of trustworthiness. The Act addresses the conditions under which a natural person is NOT trustworthy:
– Has been convicted by a final judgment of a crime against property, an economic crime or another crime committed intentionally.
– In the last 5 years before the record date or at any time thereafter, a bankruptcy decision was issued on its assets
– In the last 5 years prior to the record date or at any time thereafter, the member of the statutory or supervisory body or the board of directors or other similar body of a legal entity whose assets have been the subject of a bankruptcy decision, bankruptcy has been declared, the insolvency petition has been discontinued due to insufficient assets to cover the costs of the insolvency proceedings, or the bankruptcy of the assets has been cancelled because it was not entirely sufficient.
The conditions of trustworthiness of legal entities are similar.
The SZ is obliged to establish, maintain and apply the rules of control of its employees and the VZ, especially with a focus on the control of the rules of conduct. It shall also establish, maintain and apply procedures for identifying and managing conflicts of interest. The SZ is obliged to establish, maintain and apply a system for handling complaints.
Liability for the duration of the activity
The Tax Authority is also responsible for ensuring that the rules of remuneration of its employees, its tied representatives, must not motivate them to fail to comply with their obligations under the Consumer Act, especially in the area of dealing with consumers. The SZ is also liable for an administrative offence committed by its VZ.
The SZ and its VZ and employees must permanently meet the conditions of professional competence. This consists of general knowledge and expertise and skills. General knowledge is proved by a school-leaving certificate or a document on the achievement of higher education, professional knowledge and skills are proven by a certificate of successful completion of a professional examination by an accredited body. We will deal with professional examinations, including accredited persons, in some of the next installments.
The SZ is obliged to ensure that unclear, false, misleading or misleading information is not used in communication with the consumer. The content of the communication must be presented in a clear, concise and conspicuous manner, must be sufficient and must not obscure, downplay or conceal important facts and information that could give rise to a false expectation on the part of the consumer regarding the availability and cost of credit.
Records of communication and documents to the extent necessary for a credible certificate of proper fulfilment of obligations are kept by the Administrative Court for a period of at least 5 years from the date on which the meeting took place.
The SZ may not require a person who participates or is to participate in the intermediation of a loan (a company from an advisor or a future advisor) to make an initial or other similar payment as a condition for the payment of future remuneration for this activity (commission).
The SZ must not derive remuneration for the mediation of consumer credit (commission) from the acquisition of other persons for this activity by the person remunerated for this activity, i.e. the company must not make the payment of the commission to the advisor conditional on the fact that it brings another new advisor to the company.
In relation to its tied representatives (VZ), the SZ is obliged to provide them with demonstrably further education and development. It ensures registration (reporting) in the register, reporting of changes and possible deregistration of the VZ.
The SZ has a fundamental responsibility for its tied agents (end advisors, intermediaries).
Next week we will look at what interests most of you the most – the topic will be a bound representative – the General Assembly.