By Mark Leenards

1. Regulation of
Consumer Credits
in Lithuania
Bank of Lithuania
Justina Taraseviciene
Chief Legal Adviser
18 September 2019 Vilnius

2. 1. Main legal acts
2. Scope
3. Restrictions
4. Creditworthiness assessment
5. Cooling off and withdrawal
6. Cost of credit
7. Late payment
8. Peer-to-peer lending
9. Supervision
2
Content

3. Main legal acts

4. Main legal acts
Binding
• The Law on the Bank of Lithuania
• The Law on the Consumer Credit (23 of December 2010) (the Law)
• Regulations on the Assessment of Consumer Creditworthiness and on Responsible Lending
(19 March 2013)
• Rules on the calculation of annual percentage rate of charge
Non binding
• Guidelines on Consumer Credit (27 April 2015)
• Guidelines on Advertising Financial Services (5 September 2012)
EU practice
Directive 2008/48/EC on credit agreements for consumers
18 December 2014 judgement of the Court of Justice of the EU in case C-449/13
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5. Scope

6. Scope
• The Law is applicable to credit agreements. Credit agreement parties are
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Creditor
person, other than a natural person,
who grants or promises to grant credit
in the course of his business
Consumer
a natural person who seeks to conclude or concludes a credit
agreement for personal, family or household purposes and who
is acting for purposes which are outside his business or
profession.
Exclusions
Total amount of credit which exceeds EUR 75 000. The minimum amount of EUR 200 was not
implemented. There is no minimum amount in the Law at all.
Regulation of consumer credit = peer-to-peer lending
(All the provisions of the Law, applicable to the creditor, are applicable to the peer-to-peer lending
platform operator)

7. Restrictions

8. Restrictions
Restrictions to credit agreements
• Credit agreements may not be concluded with persons
under 18 years old.
• Credit agreements may not be concluded with persons
incapacitated in certain areas, partially incapacitated
persons in certain areas or persons who make decisions in
certain areas with assistance. The creditor and the credit
intermediary shall ensure that a person, who wishes to
conclude a credit agreement, has not been declared
incapacitated in certain areas.
• Credit agreements may not be concluded from 22:00
hours to 7:00 hours.
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9. Creditworthiness
assessment

10. Creditworthiness
assessment
Law
Before the conclusion of the credit agreement, the creditor must, following the principle of
responsible lending, assess the consumer’s creditworthiness on the basis of sufficient information
obtained from the consumer and on the basis of the consultation of registers and information
systems for the assessment of the creditworthiness of the consumer or justify the information
supplied by the consumer with other evidence.
The consumer must supply the information requested by the creditor needed to assess the
consumer’s creditworthiness.
The consumer must supply the information requested by the creditor needed to assess the
consumer’s creditworthiness.
Interest, penalties and charges in the case of late payments shall not apply to the consumer if
the creditor inappropriately assessed the consumer’s creditworthiness not through the
consumer’s fault.
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11. Creditworthiness
assessment
The Law lays down the obligation for the supervisory authority to lay down the principles for the
implementation of the responsible lending obligation.
Regulations
• Principles of responsible lending;
• Information that should be obtained from consumer;
• 40 per cent rule;
• Requirements for sustainable income;
• Where the consumer is married, the information and evidence about the consumer’s income,
expenses and obligations to financial institutions should be assessed together with the
information and evidence about the consumer spouse’s income, expenses and obligations to
financial institutions.
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12. Regulations
17. For the purpose of assessing the consumer’s creditworthiness the creditor and peer-to-
peer lending platform operator must collect and assess the following information and
evidence about:
17.1. the consumer’s income (sources of income, their diversity, sustainability, possible
changes in the future, etc.);
17.2. the consumer’s obligations to financial institutions (credits related to real estate,
other consumer credits, financial lease, repayments under the credit card limit schedules,
loans, etc.);
17.3. the consumer’s credit history of at least 6 last months and information on whether
the consumer defaults or had defaulted on his financial obligations to financial institutions, as
well as information about the consumer’s debts to financial institutions;
17.4. the impact of circumstances notified by the consumer or known to the creditor or peer-
to-peer lending platform operator regarding the economic and financial position of the
consumer and the consumer’s possibilities to properly fulfil their financial obligations;
17.5. other significant circumstances connected with the consumer’s financial position
and/or possibilities to properly fulfil their financial obligations.
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13. Regulations
9. The creditor shall be deemed to comply with the responsible lending principle when, at the
time of conclusion of the credit agreement, the average monthly amount of credit
payment of the consumer under all obligations to financial institutions does not exceed
40% of sustainable income of the consumer, excluding the case specified in paragraph 91
of the Regulations.
10. The credit granting decision shall be based on the history of average sustainable
income of the consumer of at least four last months and on the assessment of sufficiency
of the sustainable income earned during the consumer credit repayment period fixed in the
credit agreement for the fulfilment of all obligations to financial institutions. Sustainable
income shall be the income of the consumer which can be reasonably expected during the
credit granting period. When calculating the consumer credit payment amount payable by the
consumer, the creditor and the peer-to-peer lending platform operator shall assess the
consumer’s expenses that are and/or might be known to the creditor and are related not
only to the repayment of the credit, but also to other existing obligations of the consumer
to financial institutions and shall take into account income remaining after repayment of
the credit by the consumer.
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14. Cooling off and
withdrawal

15. Cooling off and
withdrawal
Cooling off
Withdrawal
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The right to withdraw from a
credit agreement within
14 calendar days
without giving any reason
Within 30 calendar days consumer has to pay:
• the credit amount
• interest (for period until the date the capital is repaid)
• compensation for charges to public administrative
body
No other compensation
The right to withdraw from a
credit agreement within
2 calendar days
from the date of disbursement of
credit
Consumer has to pay only the credit amount.
No
interest, other fees, expenses or
compensation

16. Cost of credit

17. Cost of credit
The total cost of the credit to the consumer shall be deeded not to comply with the requirements of
reasonableness, fair business practices, ensure a balance of interests of the consumer, if:
• Interest rate laid down in the credit agreement shall exceed 75 percent and any other costs
that are included to the calculation of the total cost of the credit, excluding the daily interest,
exceed 0,04 per cent of the total cost of the credit
• The total cost of the credit shall exceed the total amount of the credit
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Total cost of the credit to the consumer means all the costs, including interest,
commissions and any other kind of fees which the consumer is required to pay in connection
with the credit agreement and which are known to the creditor, except for notarial costs.
Include the costs of: maintaining an account; the costs of using a means of payment; any
other costs deriving from the payment transactions; costs in respect of ancillary services
relating to the credit agreement, in particular insurance premiums.

18. Cost of credit
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76,68
60,37 50,03
2016 m. 2017 m. 2018 m.
Average annual percentage rate of
charge
45,67
37,99 29,33
2016 m. 2017 m. 2018 m.
Average annual borrowing
rate
2016 2017 2018
21,0 26,4 30,8
538,50 680,32 886,90
Average duration of consumer credit, months
Average amount of consumer credit, Eur

19. Late payment

20. Late payment
Penalties applicable to the consumer in the case of late payments may not exceed
0.05 % of the overdue amount for each day of delay.
Penalties cannot be calculated for a period exceeding 180 days. No other penalties
and charges may be applicable to the consumer for the default on the financial
obligations provided for under the credit agreement.
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21. Peer-to-peer
lending

22. Peer-to-peer lending
Requirements for peer-to-peer lending
Peer-to-peer lending means an activity where a natural person (hereafter referred
to as “creditor”) grants or promises to grant to a consumer credit through a peer-to-
peer lending platform.
• The authorized capital of a peer-to-peer lending platform operator shall not be less
than EUR 40 000.
• The total amount of consumer credit granted by a creditor to one consumer in one
peer-to-peer lending platform shall not exceed EUR 500.
• peer-to-peer lending platform operator is not allowed to take all the amount of
remuneration after the conclusion of consumer credit agreement. Such a
requirement is not applicable where the peer-to-peer lending platform operator
invests in consumer credit (at least 12 per cent of the total amount of the consumer
credit).
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23. Peer-to-peer lending
Requirements for peer-to-peer lending
The peer-to-peer lending platform operator must:
• prepare and approve a business continuity plan.
• act honestly, fairly and professionally under optimum conditions for the creditor and
the consumer and in their interest; also not to discriminate against the consumers
and the creditors.
• hold and use credible measures and procedures that are necessary for the
operation.
• sufficiently disclose all relevant and necessary information for the creditor and the
consumer.
• implement and apply efficient organizational and administrative measures for
preventing conflict of interest.
• ensure the storage of information.
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24. Peer-to-peer lending
Requirements for peer-to-peer lending
The peer-to-peer lending platform operator shall provide the following:
• fees and other charges applied to the creditor by the peer-to-peer lending
platform operator;
• results of the assessment of creditworthiness of the consumer;
• detailed recovery procedure, in the case when the consumer does not meet the
financial commitments laid down in the credit agreement;
• information on the business continuity plan of the peer-to-peer lending platform
operator;
• information on the fact if the creditor has the right to assign the whole claim or
part of it to another person;
• other rights and duties of the creditor, the consumer or the peer-to-peer lending
platform operator related to peer-to-peer lending.
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25. Supervision

26. Types of Examinations
 Inspections (on-site)
 Investigations
 Evaluative visits
 Mystery Shopping
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27. Complaints handling process
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20
working
days
Evaluation
90 daysInvestigation
Sanction
applied
Application of
sanctions
Possibility
to forward
complaint
within 5
working
days
The right
to make
on-site
inspection
Information
is published
on the
website

28. Decision making process
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Director of
the
Supervision
Service
Prior
consultation
with the
Committee of
the Supervision
Service

29. List of sanctions
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Warning for the shortcomings and violations of their activities and set the term for the
elimination of such shortcomings and violations
Imposition of fine
Public disclosure of the violation of the law and legal acts and the person who committed it
Obligation for the consumer credit lender or the operator of the peer lending platform to
replace the manager
Removal of a person from the list of public credit lenders, public independent consumer
credit intermediaries or the public lending platform operators

30. Fines
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Legal persons:
5 percent of
the total
annual
turnover
At least twice the
amount of the
benefit derived from
the infringement
where that benefit
can be determined,
even if that exceeds
the maximum
amounts established
by laws
Natural
persons:
EUR 25 000

31. Stop consumer
credits
The service was launched on
2016-11-01
The service is dedicated:
• for persons who can't resist
borrowing
• for safety reasons when a person
wants to protect himself from
taking credit on his behalf
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32. Statistics
666 person in the list
(1 by court decision)
Age 19-92 m.
57 percent men
43 percent women
Period varies
1-1000 years
Most popular 3-5 years
130 000/1 month
queries from consumer
creditors
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32
2019-03-18 data:

33. Thank you!
Justina Taraseviciene
Chief Legal Adviser
18 September 2019 Vilnius