Remarks concerning Consumer Credit Agreements in Spain
The following remarks are framed in the context of our previous articles regarding the development, legal framework and pre-contracting process of consumer credit activities in Spain.
Annual percentage rate
All advertising and publicity on consumer credit must state the Annual Cost of Credit (TAE), along with an illustrative example. The TAE percentage should cover the total cost of the credit, including interest, charges, expenses and insurance (if any), that the client will subscribe to as a condition to the credit granted.
In principle, consumer credit agreements are subject to Spanish Value Added Tax.
International law issues
The Consumer Credit Agreements (CCA) Law expressly sets out that consumer protection measures contained therein apply not only when a CCA is subject to Spanish law, but also when the parties have chosen a different governing law, provided that the agreement has a close link (as defined in the CCA Law) to a country within the Economic European Area. Likewise, any consumer located in a Member State is entitled to file a lawsuit against a creditor in his or her place of residence.
The E-Commerce Act establishes a number of duties for any company rendering “information society services”, defined as “any service distantly, electronically, and individually rendered for profit”. The main goal of this law is to allow Internet users to clearly identify website owners, contact them, or obtain information. Briefly, three main types of information must be included on corporate websites: corporate information, contact information (including telephone number and e-mail address), and products and services information.
The E-Commerce Act establishes that, if services or products are offered or advertised through the website, complete information on these services or products must be provided. This includes an adequate description of their main features. The website’s owner must also inform users about the price of the services or goods, including all costs (i.e., delivery costs and telephone costs, if the purchase is made through a special telephone line).
General Advertising Law
The General Advertising Law establishes that sectorial laws will expressly regulate the advertising of certain products or services. In case of consumer credit agreements, advertising must fulfil the CCA Law’s provisions.
Standard Terms law
The Standard Terms Law provides for the definition of pre-drafted standard terms, as one of the parties imposes in an agreement, without prejudice of their actual authority, external appearance, extension, and any other circumstances, having been drafted with the aim of being included within a plurality of agreements.
The incorporation of a new company in Spain to undertake consumer credit activities does not require a specific regulatory license given that the new company will not be incorporated as a credit institution.
Likewise, new companies will not have to register with the Bank of Spain and hence will fall out of the Bank of Spain’s supervision.
A new company will be subject to consumer authorities and in particular to the specific legislation of the CCA Law. Hence, a new company will be subject to the obligations and rights set forth under the CCA Law as well as other complementary legislation.
This article is not considered as legal advice