Switzerland: Swiss Federal Statute On Consumer Credits Under Revision

The Federal Statute on Consumer Credits (CCS) from 8 October 1993 (Bundesgesetz über den Konsumkredit, KKG) is under revision. On 28/29 September 1999 the respective Bill passed the National Council (Nationalrat) and the State Council (Ständerat) will debate the Bill this summer.

As an example the following changes are planned:

• It is proposed that the revised CCS will regulate consumer credits comprehensively and leave the cantons no freedom for their own legislation. Correspondingly, the prevailing revised federal consumer credit law will replace the current cantonal laws.
• Upon the entry into force of the revised CCS, the current Swiss law provisions on instalment payment transactions contained in the Swiss Federal Code of Obligation will be abolished.
• Lease agreements are deemed to constitute consumer credit contracts and, therefore, will be subject to the revised CCS if they provide that the lessee bears the risk of a fortuitous destruction or deterioration of the leased good.
• Credit cards and customer cards as well as overdrafts are deemed to constitute consumer credits subject to the revised law provided that they include a credit option.
• The revised law provides for a maximum interest rate which is determined in the statute itself at 15% p.a.
• The revised law grants the consumer a right of withdrawal, which the latter may exercise in writing within 7 days.
• A consumer credit agreement is subject to the prior written approval by the spouse if the consumer is married. Furthermore, consumer credits granted to minors are subject to the prior written consent of the legal representative.
• The revised law generally prohibits joint and several liabilities for consumer credits contracts.
• The revised CCS (as does the law in force today) will provide for a minimum and a maximum threshold below and above which a credit is not deemed a consumer credit within the meaning of the law. The revised law will raise the current minimum threshold from CHF 350 to CHF 500 and the maximum threshold from CHF 40'000 to CHF 80'000.
• By contrast to the law currently in force, the new law shall require the lender to assess the credit ability of the consumer prior to the conclusion of the agreement. Furthermore, the lender has the duty to report all consumer credits to the Office of Information on Consumer Credits.