The draft amendment to the Act on Consumer Credit, which is currently in the legislative process, will transpose the EU’s Consumer Credit Directive II (CCD2) and add new layers to an already robust regulatory framework.
Set to take effect on November 20, 2026, coinciding with the deadline for CCD2’s transposition, the amendment will mark a turning point for local consumer credit regulation – strengthening consumer protection but also posing real implementation challenges for consumer credit providers.
Expanded Scope: Capturing Additional Business Models
A major game-changer will be the end of legal exemption for non-mortgage interest-free credits, including Buy Now, Pay Later schemes, which remain prevalent in the Czech Republic. Only a narrow carve-out with strict conditions on channel, SME status of the provider, duration, and non-assignment will remain. In practice, this means that most interest-free credit providers will need to obtain a respective license from the Czech National Bank. A transitional provision will permit continued operation under an existing trade license for up to 16 months following the amendment’s entry into force.
Measures Against Excessively High Prices
To tackle the problem of overly expensive credit, the amendment will also introduce two pricing caps. For most loans, the statutory cap will use the annual percentage rate of charge as the cost indicator, set at four times the Czech National Bank’s repo rate plus eight percentage points. This floor, corresponding today to 48%, will apply where the repo rate falls below 4%. If this cap is exceeded, the consumer credit provider will be entitled only to interest at the repo rate applicable on the contract date, and all other fees and charges will be disregarded. Small short-term credits (up to 12 months and up to CZK 20,000) will be treated separately. For such credits, the amendment will instead impose a cap on the maximum total cost. These caps will compel consumer credit providers across the sector to re-evaluate their business models. High-cost short-term consumer credit providers will need to re-engineer pricing structures or exit the market entirely.
Major Changes to the Creditworthiness Assessment
The amendment will also address the creditworthiness assessment, one of the most problematic aspects of consumer credit regulation and a center of many disputes between consumers and providers.
Under the current regime, a consumer credit agreement is absolutely void if the provider fails to accurately assess the consumer’s creditworthiness. The new approach limits invalidity to breaches of the creditworthiness assessment that can affect its outcome, namely, whether the consumer is deemed creditworthy. The amendment introduces a mandatory joint creditworthiness assessment for jointly and severally liable consumers, allowing the credit to be granted based on the combined ability to repay jointly.An explicit ban on the use of sensitive personal data or information from social media in creditworthiness assessment will also be introduced. If automated assessment is used, consumers will be afforded the right to human intervention and a manual review of the decision.
In practice, the amendment will be a mixed bag for consumer credit providers – it reduces legal risk by limiting invalidity to material creditworthiness errors and allowing joint assessments of co-debtors, but tightens constraints by banning the use of social media and sensitive data and requiring human review of automated decisions.
Additional Consumer Protection Measures
In another notable development, advertising for non-mortgage credit will not be permitted to suggest that credit improves the consumer’s finances or that past unpaid debts have little or no impact on creditworthiness assessment. Furthermore, all advertisements will need to include Czech translation of the warning “Caution! Borrowing money costs money” (or its equivalent). Finally, contracts concluded through pre-ticked options will be prohibited, requiring consumers to expressly choose consumer credit agreements or ancillary services. Unsolicited provision of credit (e.g., unrequested cards or limit increases) will also be banned. These advertising restrictions, together with the consent and pre-ticking requirements, will necessitate a comprehensive review and revision of all marketing materials and a redesign of online contracting processes.
Looking Ahead: Significant Challenges for Consumer Credit Providers
CCD2 and its mirroring amendment to the Act on Consumer Credit will, among other things, eliminate certain legal exemptions, impose cost caps, and introduce additional consumer protection measures. Collectively, these changes present a formidable challenge for both established consumer credit providers and new market entrants.
Given the anticipated entry into force in November 2026, consumer credit providers are well advised to start redesigning their product portfolios, integrating the new requirements into their internal governance frameworks, and revising contractual documentation to ensure compliance with the evolving legislative landscape.
***This article was also published in CEE Legal Matters***
