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LAW OF UKRAINE

of November 15, 2016 No. 1734-VIII

About consumer crediting

(as amended on 19-03-2021)

This Law determines general legal and organizational basis of consumer crediting in Ukraine according to international legal standards in this sphere.

Section I General provisions

Article 1. Determination of terms

1. In this Law the following basic concepts are used:

1) settlement of overdue debt - the debts of the consumer performed by the creditor, the new creditor, the collection company of action, directed to repayment extrajudicially who delayed accomplishment of monetary commitment (overdue debt) under the agreement on consumer loan or other agreement provided by part two of article 3 of this Law. The actions performed by Fund of guaranteeing household deposits in the course of removal of insolvent banks from the market and liquidation of banks regarding work with overdue debt of the consumer are not settlement of overdue debt;

1-1) agreements on consumer loan - type of the credit agreement by which the loan provider shall grant consumer loan in the amount of and on the conditions established by the agreement and the consumer (borrower) shall return the credit and pay interests on credit on the conditions established by the agreement;

2) total cost of the credit for the consumer - the amount of general loan amount and total expenses on consumer loan;

3) general loan amount - the amount of the means provided and/or can be provided to the consumer under the agreement on consumer loan;

4) total expenses on consumer loan - the consumer's costs connected with obtaining, servicing and repayment of the loan including interests on credit, the commissions and other obligatory payments for accompanying services of the loan provider, the credit intermediary (in the presence) and the third parties;

4-1) collection company - the legal entity (including the non-bank financial organization, which according to the law has the right to provide money in loan, including on the terms of financial loan and/or service in factoring) included in the register of the collection companies who for the benefit of the loan provider (the initial creditor) and/or the new creditor (in case of replacement of the initial creditor) according to the contract with such creditor and/or the new creditor has the right to perform settlement of overdue debt;

5) credit line - type of loan which provision is performed completely or parts in the terms coordinated by the parties during crediting term. At the same time the right of the consumer to obtain the credit within the set credit limit in case of partial or complete loan repayment during the term of the crediting determined in the agreement on consumer loan can be provided;

6) the credit intermediary - physical person, physical person entrepreneur or the legal entity who does not act as the loan provider and renders intermediary services in the sphere of consumer crediting from name, in interests and at the request of the loan provider or on its own behalf for the benefit of the loan provider;

7) the creditor - bank or other financial institution which according to the law has the right to grant consumer loans;

7-1) new creditor - person who in the procedure established by the legislation acquired under the civil agreement or on other bases of replacement of the creditor in the obligation right to claim under the agreement on consumer loan or other agreement provided by part two of article 3 of this Law;

8) real annual interest rate - the total expenses on consumer loan expressed as a percentage annual from the general size of the issued credit;

8-1) register of the collection companies - system of obtaining, accumulating, storage, use and distribution of information (data) on the collection companies;

9) the consumer - the physical person which signed or intends to sign the agreement on consumer loan;

10) consumer crediting - legal relationship on provision, servicing and return of consumer loan;

11) consumer loan (credit) - the money provided to the consumer (borrower) on purchase of goods (works, services) for satisfaction of the needs which are not connected with business, independent professional activity or accomplishment of obligations of hired employee.

2. The term "close persons" is used in this Law in the value given in the Law of Ukraine "About prevention of corruption".

Other terms in this Law are used in the value given in the Civil code of Ukraine, the Law of Ukraine "About consumer protection" and the laws of Ukraine concerning regulation of the markets of financial services.

Article 2. Law purpose

1. The purpose of this Law is protection of the rights and legitimate interests of consumers and loan providers, creation of proper competitive environment in the markets of financial services and increase in trust to it, providing favorable conditions for development of economy of Ukraine, harmonization of the legislation of Ukraine with the European Union law and international standards.

Article 3. Law coverage

1. This Law governs the relations between loan providers, credit intermediaries and consumers in case of provision of services of consumer crediting, and also the relations arising in connection with settlement of overdue debt under agreements on consumer loan and other agreements provided by part two of this Article.

2. This Law, except provisions on settlement of overdue debt, Item 9 parts three of Article 9, of Item 15 parts one and parts two of article 12 of this Law, does not extend on:

1) the agreements containing condition about consumer loan in the form of crediting of the account from loan repayment period to one month;

2) loan agreements which do not provide interest payment or any other payments for use of the money provided under such agreements;

3) credit agreements which purpose is provision to the consumer of the right to make transactions with financial instruments if such transactions are made with participation or with mediation of the loan provider or other professional participant of the security market;

4) the loans granted under the agreements signed as a result of dispute settlement by the conclusion of the voluntary settlement approved by court;

5) the loans granted only within the appropriate state programs or programs of local government bodies to certain circle of physical persons also provide separate, determined by such programs, terms for crediting, including interest payment for use of the credit;

6) the unauthorized overdraft which is excess of the transaction amount which is carried out on the account over the amount of the set credit limit which is caused by the contract between the loan provider and the consumer and is not predicted by the size and time of origin;

7) No. 891-IX Is excluded according to the Law of Ukraine of 15.09.2020

8) the loans granted by pawnshops in case of transfer of subject of pledge on preserving pawnshop if only obligations of the consumer are limited to pledge subject cost.

3. Only requirements of part one, part two Items 1 and 2 of Article 7, of Articles 8 - 10, parts one - the fourth article 12, of article 13, of Article part six 15, of the article 18, of article 21 of this Law, and also provision concerning settlement of overdue debt are applied to the credits in the form of crediting of the account with loan repayment period which constitutes from one to three months or on demand.

4. To the credits under agreements under which general loan amount does not exceed the size of one minimum wage established on the date of the conclusion of the credit agreement, requirements of this Law, except parts two - the seventh, paragraph two of part ten and part twelve of Article 9, of Article part six 14, of Article 19 and part two of article 21 of this Law, and also provision on settlement of overdue debt are applied.

5. Provision (obtaining) of consumer loans in foreign currency in the territory of Ukraine is forbidden.

Article 4. Legislation on consumer crediting

1. The legislation on consumer crediting in Ukraine is based on the Constitution of Ukraine and consists of this Law and other regulatory legal acts on the consumer service delivery.

2. If the international treaty which consent to be bound is provided by the Verkhovna Rada of Ukraine establishes other rules, than the legislation of Ukraine, rules of the international treaty are applied.

Article 5. State regulation and supervision in the sphere of consumer crediting

1. State regulation and supervision in the sphere of consumer crediting is exercised by the National Bank of Ukraine.

2. The National Bank of Ukraine in the sphere of consumer crediting:

1) approves method of calculation of total cost of the credit for the consumer and real annual interest rate under the agreement on consumer loan;

2) establishes requirements to credit intermediaries and their activities;

3) establishes requirements to loan providers, new creditors, the collection companies and their activities when implementing of settlement of overdue debt by them;

4) exercises supervision of observance by loan providers, new creditors, the collection companies of the consumer protection law of financial services, including requirements for interaction with consumers in case of settlement of overdue debt (requirements of rather ethical behavior);

5) exercises control of compliance with law about advertizing;

6) makes the decision on reference of the measures directed to repayment extrajudicially to debt of the consumer who delayed accomplishment of monetary commitment under the agreement on consumer loan or other agreement provided by part two of article 3 of this Law to implementation of activities for settlement of overdue debt (collection activities);

7) considers addresses of consumers of financial services, within competence checks the facts of violation of their rights stated by consumers and according to the legislation makes decisions by results of consideration of addresses;

8) within competence takes the measures directed to suppression of the revealed violations of the rights of consumers, recovery of the violated rights of consumers, establishment and elimination of the reasons of such violations, establishment of the officials responsible for the revealed violations;

9) makes the decision on entering into the register of the collection companies or on refusal in such inclusion;

10) is conducted by the register of the collection companies and establishes procedure for its maintaining;

11) performs other powers provided by the law.

3. The National Bank of Ukraine exercises supervision in the sphere of consumer crediting in forms of inspection checks and permanent supervision.

4. Other state bodies exercise control of activities of participants of the market of consumer crediting and obtain from them information within the powers determined by the law.

Article 6. Credit intermediary

1. Consumer loans can be granted with participation of credit intermediaries. Loan brokers or credit agents can act as credit intermediaries.

Activities of credit intermediaries do not belong to financial services and can include collection and document handling of the consumer for receipt of consumer loan, identification and verification of the consumer, preparation and signing on behalf of the loan provider of the agreement on consumer loan, consultation, provision of information and other intermediary services in consumer crediting.

Credit intermediaries can act outside the registered location of financial institutions which interests they represent.

2. The loan broker is legal entity or physical person the entrepreneur which on its own behalf for the benefit of the loan provider performs for remuneration intermediary activities in the sphere of consumer crediting.

The loan broker bears responsibility for completeness and accuracy of the data before the loan provider, collected by him about the consumer.

3. The credit agent is the physical person, physical person entrepreneur or the legal entity acting on behalf and for the benefit of the loan provider and carries out part of its obligations under the agreement on consumer loan. The credit agent acts on the basis of the contracts of the order with the loan provider.

4. Before the conclusion of the agreement on consumer loan the credit intermediary shall provide to the consumer in writing information relatively:

1) the name (surname, name, middle name) and location;

2) state registration (for physical persons entrepreneurs and legal entities);

3) whether the credit intermediary is loan broker or the credit agent, the sphere of own powers;

4) names of the loan provider (loan providers) for the benefit of which, (which) the credit intermediary acts;

5) the list of services which are offered by the credit intermediary;

6) amount of remuneration (sales charge) or other service fee of the credit intermediary.

If the credit intermediary represents the interests of several loan providers at the same time, he shall inform on it the consumer and provide it identical amount of information on proposals of all loan providers, and also not allow discrimination of certain loan providers.

5. Information on sales charge or other payment paid by the consumer to the credit intermediary for its services is provided by the credit intermediary to the loan provider for calculation of total costs for consumer loan and real annual interest rate.

6. Information on credit intermediaries is posted on their own websites (in the presence), on the website of the loan provider (about the credit intermediaries who are acting for the benefit of this loan provider) and in places, access to which is free for consumers, in all rooms of the credit intermediaries intended for rendering the corresponding services.

The Section II Information support of the agreement on consumer loan and the actions preceding it the conclusions

Article 7. Advertizing of consumer loan

1. If in advertizing about provision of consumer loan the interest rate or any data concerning total expenses on consumer loan is specified, such advertizing in addition with the requirements established by the legislation on advertizing shall contain standard information.

2. In standard information it is determined:

1) maximum amount on which the credit can be issued;

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