The Czech Republic has adopted comprehensive consumer finance regulations, which provide the consumer with sufficient, though in some respects excessive, protection. Czech consumer financing legislation is inspired by European regulation of consumer finance, which has displayed an increasing tendency to protect the consumer in recent years, in particular by strengthening the consumer's position in consumer credit regulation.

The year 2018 was the first year of entry into force of a number of new, or rather updated, European directives and regulations which overlap into consumer finance in the Czech Republic, namely the MiFID II, PSD2 packages, and since December 2018, the IDD implementation. During 2017 and 2018, the new consumer credit regulation began to be reflected in practice, with one of the main effects being a decrease in non-bank entities providing consumer credit because of the obligation to obtain a licence under the CCA (as defined below). The Czech National Bank (CNB) has decided nearly all requests for granting a licence filed by non-bank consumer credit providers and most of the requests filed by independent intermediaries.

The CNB supervises the entire consumer finance market, which should ensure a higher level of consumer protection. Consumers may benefit not only from the new regulation establishing rules for entities and processes on the financial market but also from the possibility of alternative resolution of disputes with financial institutions.


i Legislation

In the Czech Republic, a consumer's position and its statutory protection are regulated and ensured by various legal acts containing both general consumer protection rules as well as specific rules for providing loans and other payment services to consumers.

The core legal regulations ensuring the protection of consumers include the following acts, which have been influenced by European legislation:

  1. Act No. 257/2016 Coll. on Consumer Credit (the CCA) implementing:
    • Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC (CCD);
    • Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No. 1093/2010 (MCD);2
  2. Act No. 634/1992 Coll. on Consumer Protection (CPA) implementing:
    • Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No. 2006/2004 of the European Parliament and of the Council;
    • Directive 2011/83/EU of the European Parliament and of the Council of 11 May 2005 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council;
  3. Act No. 284/2009 Coll. on the Payment System (PSA) implementing Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC, and repealing Directive 97/5/EC (in force until 13 January 2018);
  4. Act No. 370/2017 Coll. on Payment System (New PSA), implementing Directive 2015/2366/EU on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No. 1093/2010, and repealing Directive 2007/64/EC (entry into force on13 January 2018);
  5. Act No. 216/1994 Coll. on Arbitration and the Enforceability of Arbitration Awards (the Arbitration Act);
  6. Act No. 89/2012 Coll. Civil Code (the Civil Code);
  7. Act No. 374/2015 Coll. on Recovery and Resolution in the Financial Market (the FMRA) implementing Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms;
  8. Act No. 256/2004 Coll. on financial market undertaking, implementing, among others, Directive 2014/65/EU on markets in financial instruments; and
  9. Act No. 170/2018 Coll. on insurance and assurance distribution, implementing Directive 2016/97/EU on insurance distribution (recast).

ii Regulation

The Czech parliament adopts laws in the Czech Republic, but individual implementing regulations are generally issued by relevant authorities; for example, the CNB issues implementing regulations regarding the consumer financing market. The powers of the CNB have been recently broadened in connection with the implementation of the CCA, which became effective on 1 December 2016. The CNB now supervises the consumer credit market instead of individual trade offices (which formerly granted trade licences to non-bank providers of consumer credit) and the Czech Trade Inspection Authority (CTIA) (which carried out inspections of non-bank providers). The CNB now decides who will be entitled to operate on the market and maintains a register of licensed persons in the area of consumer credits. It also oversees the fulfilment and observation of the conditions stipulated by the CCA and may impose sanctions for non-compliance with the CCA.

After the expiry of the transitional period set down by the CCA (until 31 May 2018), during which the CTIA has supervised certain non-bank providers, the CNB became the sole supervising authority within the consumer financing market.

In the event of any disputes, consumers may approach the Financial Arbitrator –the competent authority entitled to settle disputes between institutions and their clients regarding, for instance, provision of payment services, transfer of funds, use of electronic payment instruments, provision of credit, collective investment products, life insurance or foreign exchange transactions. In addition to this alternative dispute resolution method, a consumer may also file a claim with a competent court.

As of 1 December 2016, and pursuant to the CCA and the Arbitration Act, it is no longer possible to agree on an arbitration clause in contracts with consumers.


i Overview

As of 13 January 2018, payment methods became regulated by the New PSA, which establishes conditions under which payment service providers may provide their services. Consumer protection in this respect consists of, in particular, information obligations of the payment system providers towards the consumers and the setting of deadlines for the processing of payment transactions.

The PSA does not apply to direct cash transactions, which fall under general civil law regulation. The Act on the Restriction of Cash Payments sets forth certain cases where payment may only be made via a wire transfer (for instance a payment exceeding the amount of 270,000 koruna).

The Czech Republic remains the leading country in the EU for contactless payments. The use of contactless payment cards has seen a sharp increase in the Czech Republic over the past few years, with all the major banks offering contactless payment cards. According to statistics from 2018, 91 per cent of Czech citizens own a contactless payment card and 69 per cent of them prefer contactless payments.3

ii Recent developments

In 2016 the amendment to the PSA, which implemented Directive 2014/92/EU of the European Parliament and of the Council of 23 July 2014 on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features, was adopted and came into force and effect as of 1 March 2017. This amendment enables consumers to easily switch between payment accounts of different banks while preserving all their recurring payments settings. The amendment also requires that banks use uniform labelling of services provided in connection with payment accounts, which should provide consumers with a better opportunity to compare similar services provided by different banks and their prices.

As of 13 January 2018, the New PSA came into force, implementing the Second Payment Services Directive. This New PSA will introduce various new measures aimed at stronger protection of consumers (including mandatory two-factor identification, and lowering the participation for losses caused by unauthorised payments and stolen payment instruments from €150 to €50).

The Act No. 297/2016 Coll. on Trust Services for Electronic Transactions (TSA) was adopted in 2016 and implemented Regulation (EU) No. 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC. The TSA regulates only the aspects which the Regulation expressly determines are to be regulated at national level, such as certain practices of, and requirements imposed on, trust service providers and rules regarding electronic signatures, electronic seals and the preservation of documents using electronic time stamps. It further establishes the Ministry of Interior as the trust service providers' supervising authority. The Act does not regulate electronic identification as this is governed by Act No. 250/2017 Coll., which came into effect on 1 July 2018.


i Overview

In order for a bank to be able to accept deposits from the public in the Czech Republic, the bank is required to hold a banking licence under the Act No. 21/1991 Coll. on Banks (the Act on Banks).

The guarantee of receivables from deposits is facilitated by a financial market guarantee system established under the FMRA; this guarantee system includes a fund that serves as deposit insurance. The assets in this fund comprise mainly contributions from local banks and branches of banks from non-EU states, proceeds from investments, insolvencies and liquidations. The guarantee does not apply to deposits from certain persons such as banks, financial institutions, insurance companies or the state. The limit of deposit insurance under the guarantee system is €100,000 per one person with a deposit account in one bank.

ii Recent developments

At the end of 2015, the Czech Republic implemented (1) Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes and (2) Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms, into the Act on Banks and the FMRA. The implementation has led to the establishment of the financial market guarantee system, which administers the deposit insurance fund, and to new obligations for banks to provide their clients with information regarding the system of deposit insurance.


i Overview

The regulation of consumer credit contained in the CCA also applies to revolving loans and sets down certain additional information obligations and rules enabling the termination of these loans if they had been concluded for an indefinite period of time.

ii Recent developments

In 2016, one of the major Czech banks started offering a new alternative to the 'payday loans' aimed at clients without financial reserves who tend to seek out problematic loan companies when they face unexpected expenses. The loan in question is a small revolving consumer loan within the range of 5,000 to 50,000 koruna with an annual interest rate of 16.9 per cent.


i Overview

Providing consumer loans in the Czech Republic requires obtaining a licence from the CNB – either a bank licence, a licence for a provider of certain payment services or a licence for a non-bank provider. A licence is required for all types of consumer loans, including those relating to residential immovable property.

The rules for providing consumer loans are set out in the CCA, which inter alia contains certain specific provisions for consumer mortgage loans relating to residential immovable property (in accordance with Directive 2014/17/EU). Loans may only be provided if the consumer's creditworthiness is proved to the lender before a consumer credit agreement is entered into or prior to any substantial increase in the total amount of consumer credit. Should the provider grant a consumer loan to a consumer in violation of the results of the creditworthiness assessment (i.e., also when there are reasonable doubts as to the consumer's ability to repay the loan), the agreement will be deemed invalid. In such case, the consumer is obliged to return the principal of the consumer loan within a period corresponding to his or her options and capabilities.

A lender must provide a consumer with a set of pre-contractual information (including the annual percentage rate), which allows the consumer to assess the conditions offered and compare it to products of other providers. Certain information obligations must be complied with not only at the time the consumer loan agreement is being entered into but also throughout the course of the corresponding contractual relationship. Non-compliance with certain information obligations by the lender results in a decrease of the agreed lending interest rate to the repo rate announced by the CNB.

The CCA implements certain limits for payments, which the lender may require in the event that the consumer is in default, prepays the consumer loan or any part thereof or withdraws from the agreement within 14 days after it had been concluded.

Moreover, the lender must provide the consumer with an additional period of time before it accelerates the loan or enforces the mortgage. Security provided for consumer loans may not be obviously disproportionate to the amount of the secured receivable. It is also forbidden to use telephone lines with higher fees (premium-rate numbers) for the purpose of providing consumer loans or access to related services. Consumer loans must not be secured by a promissory note or a cheque.

ii Recent developments

The CCA, in effect since 1 December 2016, significantly changed existing consumer credit regulation. The goal of the CCA was not only to implement the MCD but also to unify the regulation of ordinary consumer loans and mortgage-backed loans, to align such regulation with the principles of regulation in other sectors of the financial market, to improve the quality of services provided by the retail credit market and to reduce irresponsible lending.

Unlike the old CCA, the CCA covers all types of loans provided to consumers; previously, the old CCA did not apply to loans lower than 5,000 koruna or higher than 1.88 million koruna or to loans provided for housing purposes.

As far as institutional regulation is concerned, the CCA also places very strict requirements on non-bank providers of consumer credit. This measure, which goes beyond European legislation, aims to force unfair providers from the market and to reduce the number of non-bank providers of consumer loans. However, according to some experts and consumer protection organisations, the side effect of tightening legal requirements may be the expansion of the grey market where the legal rules will not be respected at all.

During 2018, the CNB finished deciding all licence applications filed by the non-bank providers of consumer loans that wished to continue their activities in this area under the new regulation and had therefore applied before 1 March 2017. In order to obtain a licence from the CNB, the non-bank providers had to prove that they comply with the strict requirements laid down in the CCA; these include certain corporate requirements (such as a special form of legal entity, minimum amount of capital, origin of capital), personal requirements (the non-bank providers and persons representing them in providing loans must be credible and professionally qualified, i.e., have a certain level of education and pass a professional exam provided by an accredited entity) and requirements regarding internal procedures (including anti-money laundering rules, remuneration policy, rules for creditworthiness assessment, rules for dealing with consumers' complaints and claims, rules for addressing consumers in default, rules for enforcing receivables, rules for external and internal communication, rules for verifying and controlling the activities of persons representing the lender, etc.).

Non-bank entities who were allowed to provide consumer loans before 1 December 2016 on the basis of a trade licence were allowed to do so until the CNB decided on their application for a licence for a non-bank provider, but not longer than 18 months after the CCA became effective, provided that the application for the relevant licence was submitted before 1 March 2017. Approximately 100 non-bank providers applied for the licence, which was granted to 86 of them.

The CNB continues to issue guidelines, benchmarks and other documents concerning the interpretation of the CCA, the submission of the application for the licence and details of the CNB's expectations on how the individual conditions set down by the CCA should be met.

Some banks in the Czech Republic have started offering a new service for payment cards. When paying with a card, the client has the choice to pay the purchase price straight away or to spread the payment across monthly instalments. The decision is made by the clients in their internet banking after the purchase. This step is the banks' reaction to the declining demand for credit cards. At first, this new option is expected to be available only in internet or mobile banking applications but there is the possibility that it will spread to card payments directly in shops.


In connection with the implementation of the CCA, intensive discussions were held as to whether a deferred payment agreement relating to the postponement of payments under an existing loan agreement or from an energy supply agreement (concluded either by the original creditor or with the assistance of a debt collection agency) falls within the scope of the CCA. The definition of a consumer loan contained in the CCA also includes deferred payment, but the CCA does not apply to consumer loans provided free of charge. On 8 December 2016, the European Court of Justice (Case C127/15) decided that (1) a credit rescheduling agreement, which is concluded following the consumer's default, between that consumer and the lender through a debt collection agency, is not agreed as 'free of charge', where, by that agreement, the consumer undertakes to repay the total amount of that credit and to pay interest and costs that were not provided for by the initial contract under which that credit was granted; and (2) a debt collection agency that concludes, on behalf of a lender, a rescheduling agreement for unpaid credit but which acts as a credit intermediary only in an ancillary capacity, which is for the referring court to determine, must be regarded as a 'credit intermediary'. The combination of this decision together with Czech legal requirements regarding non-bank providers and intermediaries leads to the conclusion that a collection agency that agrees or intermediates a deferred payment agreement with a consumer containing payments in addition to those originally agreed, would be considered to be performing intermediation in the sense of the CCA and would need to obtain the relevant licence from the CNB. The implications of that decision are far-reaching: energy suppliers who conclude a deferred payment agreement containing additional payments with a consumer would theoretically need to obtain a licence for a non-bank provider and fulfil all the conditions set down by the CCA. This could, as a consequence, be disadvantageous for the consumer as the suppliers would in the end directly enforce the due payments rather than enable the consumer to postpone the payments on the basis of a deferred payment agreement.

In order to maintain the current stability of the market and to prevent a dramatic increase of household indebtedness, the CNB issued a recommendation in June 2016 that after 1 April 2017 banks should not provide mortgages with the loan to value (LTV) indicator exceeding 90 per cent. Furthermore, mortgages with LTV ranging from 80 to 90 per cent should not exceed 15 per cent of mortgages provided for each quarter. As a result, households with insufficient capital will not be able to afford a mortgage. The CNB issued this recommendation in response to fears that the increasing demand for mortgages leading to an increase in the market price of real estate will result in the inability of many households to pay off their mortgages. The increase in real estate prices is still ongoing, however, although it has gradually slowed down during 2018. In 2017, the real estate prices compared to 2016 have risen by 12.8 per cent. In 2018 the prices have been rising by approximately 7.5 per cent compared to 2017. With another recommendation issued in June 2017, the CNB has expanded the LTV limitation onto other types of consumer credit. The CNB also officially recommended that starting from 1 October 2018 both banks and non-bank loan providers take into account the debt to income and debt service to income (DSTI) indicators, showing the clients' income compared with their indebtedness. According to recent reports, the CNB is working on an amendment to the Act on CNB, which would allow the CNB4 to set legally binding LTV, DTI and DSTI limits instead of the current form of mere recommendations.


In recent years, the topic of ad hoc arbitration clauses in consumer loan agreements has been widely discussed. The general conclusion is that if certain conditions have not been met, ad hoc arbitration clauses can cause an imbalance to the detriment of the consumer and including such arbitration clauses in consumer loan agreements is therefore considered to be an unfair practice. In terms of consumer protection, ad hoc arbitration can cause various problems, one of the most severe being the inability to have the arbitral award reviewed by a court on the facts of the case. In October 2013, the Supreme Court of the Czech Republic decided that an ad hoc arbitration clause meets the conditions of being an unfair contractual clause if (1) it had not been agreed upon individually, (2) the creditor could not have reasonably expected the consumer to agree with the clause after an individual discussion, and (3) the arbitration clause creates a significant imbalance between the parties. According to the Supreme Court, ad hoc arbitration clauses in consumer loan agreements are only acceptable if the selection of the arbitrator is transparent and the consumer is guaranteed the same rights as in proceedings before ordinary courts. In a decision issued in July 2014, the Supreme Court also held that if the consumer is not given the opportunity to affect the content of the arbitration clause (i.e., the consumer has to, without any reservations, accept the conditions set out by the creditor in order to be granted a loan), that arbitration clause is contrary to the consumer protection rules. In order to protect consumers, ad hoc arbitration clauses that do not meet those conditions have been deemed invalid, causing the relevant arbitration awards to be unenforceable.

In December 2016, the amendment of the Arbitration Act prohibited arbitration clauses in consumer loan agreements entirely (this applies to all consumer agreements in general), and disputes arising therefrom can now only be handled by ordinary courts.


i Enforcement actions

In 2014, the CTIA imposed fines on loan companies for wrongly calculating the annual percentage rate (APR) in consumer loan agreements. The disputes arising out of these decisions have led to a major decision of the Supreme Court of the Czech Republic5 regarding the effect of a wrongly calculated APR in consumer loan agreements. According to the old CCA, the consumer loan agreement has to include certain information, including the APR. However, if the consumer loan agreement does not include all the required information and the consumer informs the creditor thereof, the consumer loan is deemed to have been granted with the interest rate in the amount of the annual discount rate published by the CNB (which has been within the range of 0.05 per cent to 2.5 per cent per annum over the last decade)6 with effect from the date of the relevant consumer loan agreement and any provisions on any other payments under the consumer loan agreement are invalid. Prior to the discussed decision, Czech courts have claimed that a wrongly calculated APR in a consumer loan agreement does not cause the aforementioned effect, because – as long as the agreement includes the APR (whether calculated correctly or incorrectly) – the information requirements set out by applicable legislation have been met. In July 2016, however, the Supreme Court decided that if any of the information provided by a creditor is wrong, it constitutes a violation of the law causing the aforementioned effect on the interest rate and on the validity of any provisions regarding any other payments under the consumer loan agreement. The Supreme Court decision was issued only a few months before the enactment of the CCA, which contains more specific rules to deal with this issue. The rules under the CCA are: (1) if the consumer loan agreement does not include the APR at all, the interest rate is equal to the repo rate published by the Czech National Bank as of the date of the agreement, unless the originally agreed interest rate was lower (in which case that interest rate applies), and (2) if the APR set out in the consumer loan agreement is lower than it actually is, the interest rate and the entire amount that the consumer is obliged to pay are lowered so that they correspond to the APR provided in the consumer loan agreement. As a result of this decision of the Supreme Court, the loan companies that had been wrongly calculating the APR under the old legislation may be ordered to return a vast majority of interest that they have received from consumer loans resulting in potential losses in the range of billions of koruna.

Most recent enforcement actions include (1) failings in proper handling of damaged coins and banknotes (banks and payment services providers – fines ranging from 300,000 to 1 million koruna), and (2) providing false information in applications according to the CCA (credit providers and intermediaries failing to provide information about previous fines according to the old CCA – fines around 30,000 koruna).

ii Disputes before the regulator

As of December 2016, the CNB has become the regulator and supervising authority for non-bank providers of consumer loans. Currently the main agenda of the CNB in this regard is the granting of licences to companies intending to provide or intermediate consumer loans. As the CNB has only been acting as the regulator in this area for a short period of time any significant disputes are yet to come.

In the Czech Republic, the equivalent of an ombudsman for consumer finance is the financial arbitrator. The financial arbitrator provides free resolution of disputes between consumers and financial institutions; the proceedings are commenced on the application of the consumer. In 2018, the financial arbitrator issued a series of controversial decisions in disputes concerning an 'investment life insurance agreement' that could affect the validity of hundreds of thousands of agreements between insurance companies and consumers. The type of agreement in question is quite common in the Czech Republic and can be described as an agreement with an insurance component and an investment component. One of the problematic aspects was the inclusion of uncertain provisions concerning administrative and other fees charged to the consumers, which led to the decision of the financial arbitrator that such agreements are invalid in their entirety from the very beginning and that the insurance companies have to return all payments as unjust enrichment. Another problematic aspect was that the insurance component in some of these agreements was basically suppressed, meaning that the sum insured in the event of the consumer's death was zero. In the dispute, the consumer demanded that the agreement be deemed invalid from the very beginning because the insurance company did not assume any insurance risk and basically only provided an investment service. Although the consumer was duly informed about the whole concept of the disputed agreement by the insurance company, the financial arbitrator declared the agreement invalid as being contrary to the Act on Insurance Agreements,7 in particular because the insurance company did not assume any insurance risk. Again, the insurance company was ordered to return all payments made by the consumer.

The financial arbitrator's decisions concerning those disputes will be reviewed by the courts. Should the decisions prevail, hundreds of thousands of similar agreements may be deemed invalid, which brings a lot of uncertainty for both the insurance companies and the consumers who may have already increased the value of their assets through such agreements and may also be forced to return any such proceeds. In recent years the financial arbitrator has also been resolving disputes related to wrongly calculated APRs in consumer loan agreements. The financial arbitrator has repeatedly decided that one of the loan companies has been wrongly calculating the APR in its consumer loan agreements and has adhered to the opinion confirmed by the Supreme Court in July 2016 that a wrongly calculated APR means that the consumer loan is deemed to have been agreed with an interest rate in the amount of the annual discount rate published by the CNB. Prior to the discussed decision of the Supreme Court, however, some of the decisions of the financial arbitrator had been overturned by courts, which have been dealing with appeals against the decisions of the financial arbitrator.

iii Litigation

In 2013, thousands of clients brought cases against banks claiming that the banks had been illegally charging loan account management fees. The clients claimed that the loan agreements included clauses regarding account management fees that were in violation of Section 56 of the Civil Code, which forbids certain unfair provisions in consumer contracts. These cases were inspired by a decision of the German Federal Court of Justice from July 2011, which found such fees to be illegal as the loan accounts exist mainly for the purposes of the bank's accounting and not as a service to the client, thus charging fees for the management of such accounts to the client constitutes an unjustified transfer of the bank's costs onto the client. In the Czech Republic, however, the vast majority of these disputes have ended with a decision in favour of the banks.

For the purposes of this chapter, one particular case can be used as an example as it is the only one that has been reviewed by the Czech Constitutional Court. In this case the claimant had entered into a loan agreement with the bank, and the agreement contained a clause requiring the consumer to pay a loan account management fee in the amount of 150 koruna per month (the clause). The claimant had been paying the fee for over five years without any objections before coming to the conclusion that the fees had been charged illegally and suing the bank to return the fees paid in the amount of 7,200 koruna on the grounds of unjust enrichment. The claimant argued that the bank had not specified what services were being provided for the account management fee and that, therefore, the clause was invalid due to being uncertain and incomprehensible. In addition, the claimant asserted that the clause was in violation of the prohibition of deviations from the law to the detriment of the consumer , as well as in breach of good faith, resulting in a significant imbalance in the rights and obligations of the parties. The District Court in Prague 4 dismissed the action on the following grounds: (1) the clause was a sufficiently specific declaration of will and the subsequent behaviour of the parties indicates that both parties knew what the fee was being charged for as the claimant had been paying the fee for five years without any objections; (2) the clause did not constitute an invalid deviation from the law to the detriment of the consumer as the purpose of consumer protection is mainly to provide consumers with sufficient information enabling them to make free decisions on the market rather than limiting their contractual freedom to such an extent as to prevent them from undertaking obligations other than those specifically set out by law for certain types of contracts; (3) the clause specified the price for performance, therefore, according to Section 56(2) of the Civil Code, it is exempt from being reviewed by courts in terms of being unfair towards the consumer; and (4) charging fees related to the management of consumer loan accounts is a common practice in the banking world and is supported by legal regulations.

As the claim was only for the amount of 7,200 koruna, the decision of the District Court in Prague 4 was final without the possibility of an ordinary appeal to be filed (which Czech law only allows for claims exceeding 10,000 koruna). The claimant therefore instead decided to file a constitutional complaint to the Constitutional Court, which consequently dismissed the complaint. One of the main arguments of the court was based on the assertion of a balance between consumer protection regulations and the principle of the autonomy of will, in respect of which the Constitutional Court stated that the principle of the autonomy of will and freedom of business activity cannot be replaced by the paternalistic interference of the state.


After the recent trend of decreasing interest rates in mortgages, which led to a dramatic increase in demand in this area, interest rates have gone up. One of the main reasons for this change is the adoption of the CCA, which increased the banks' costs of providing mortgages by imposing stricter administrative requirements and giving consumers more options to make early repayments. The adoption of the CCA caused a slight increase in the price of consumer loans in general. The demand for consumer loans consequently slightly decreased. Along with an increase in consumer loan interest rates, the demand for loans could also have dropped because of low interest rates in savings accounts, which could encourage consumers to use their savings before applying for a loan. The drop in demand may also have been caused by the LTV, DTI and DSTI limits set out by the CNB recommendations, which reduced the number of people eligible for mortgages. Furthermore, the amount of available real estate on the market has been reducing.

However, it is expected that the CNB will continue its interference in response to the real estate and mortgage bubble that the Czech Republic is currently experiencing as a result of high demand for mortgages. It remains to be seen whether the CCA will become an effective instrument of consumer protection in the area of consumer loans.

In respect of payments, we expect the continuation of the increasing trend of cashless and contactless payments along with the implementation of new technologies in financial services. Along with the implementation of Regulation (EU) No. 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC, banks are expected to require their clients to use electronic IDs to log in to internet banking applications.

In August 2016, the Czech parliament adopted the Act on the Central Evidence of Accounts, which came into effect in January 2018. This Act implements a part of the European Commission's anti-terrorism package and will enable the government to access information about individual clients of banks and their accounts.


1 Michaela Ericssonová is an attorney and Viktor Glatz is a legal assistant at PRK Partners sro advokátní kancelář. Martin Frolík is a regulatory and compliance expert at the firm.

2 The CCA replaces Act No. 145/2010 Coll. on Consumer Credit (the old CCA) implementing the CCD.

3 The statistics were presented by the Czech Bank Card Association which are available here in Czech only: https://zpravy.aktualne.cz/ekonomika/pocet-platebnich-karet-v-cesku-loni-klesl-10-7-milionu-bezko/

4 Act No. 6/1993 Coll.

5 32 Cdo 4838/2015.

7 Act No. 37/2004 Coll.