As of January 1, 2016, credit institutions are required to review their communication. Stricter regulations apply to credit advertising and narrow limits are set for aggressive advertising.
This revision comes at the suggestion of JoAnne Polbert (PS / VD), who introduced a parliamentary initiative in 2010 to ban small business advertising. In 2014 the National Council and the Council of States approved, but leave the wasteland free to self-regulate.
As a result of this revision, the Association of Swiss Credit Banks and Financial Institutions has decided on an agreement for self-regulation. It is about defining the principles that apply to the promotion of consumer credit, which the members of the association must adhere to.
The main significant changes are the following:
Content of the agreement on self-regulation
Loans granted quickly
Advertising must not suggest that consumer credit can be obtained particularly quickly. Shock arguments such as express credit, credit check within 30 minutes or crediting the credit amount within 4 hours are no longer permitted.
Analysis of the consumer
The advertising must not give the impression that the institution is neglecting the credit check. As a result, ads like you determine your monthly installments are taboo regardless of your income.
Loans for short-term leisure activities
Expensive and short-term leisure activities such as vacations, weddings or birthdays are also banned from credit advertising.
In addition, advertising may no longer use arguments that are not economically viable, such as taking out a loan to pay tax debts.
Sales methods that can shock or are opaque, such as distributing credit documents on public streets and squares and advertising coupons, the shape and design of which are reminiscent of banknotes, are now also prohibited.
Young adults (under the age of 25) are also better protected, they are now excluded as a target group for advertising for consumer loans. This includes the prohibition of arguments, but also of advertising locations: For example, it is no longer permitted to advertise consumer loans in arcades.
Sanctions in the event of non-compliance with these rules
Institutions that do not follow these new rules can be fined USD 100,000. In addition, the scope of the agreement has been extended to the partners of the member institutions. The member institutions participating in the agreement may be asked to discontinue cooperation with partners, such as brokers, who do not adhere to this agreement.
Review of the potential borrower
This new measure complements the other provisions of the revised Consumer Credit Act. The institute can require the consumer to provide an extract from the debt enforcement register and a pay slip. If in doubt, the credit institution may request additional documents to verify the veracity of the customer’s information.
The aim is to protect customers from unscrupulous facilities but also from themselves by checking their solvency and financial reliability in advance.