In Switzerland, the Federal Consumer Credit Act (KKG) protects the interests of borrowers and serves to prevent over-indebtedness. In this blog post, we take a closer look at the Consumer Credit Act and explain what it entails, how it is applied and why it plays an important role in the Swiss financial system.
What is the KKG?
The KKG is a federal law that aims to increase the protection of borrowers against over-indebtedness. It represents a comprehensive regulation for consumer credit agreements that cover loans in the area of 500 to 80,000 francs cover. The introduction of the KKG has replaced the previous provisions of the Code of Obligations on instalment contracts.
Content of the KKG: A comprehensive regulation
The KKG not only regulates traditional loans, but also extends to various financial instruments such as credit cards, store cards, personal loans, leasing agreements and overdraft facilities. It sets out clear guidelines for credit checks and grants the borrower the right to repay the loan at any time.
Application of the KKG: Credit assessment and responsibility
Before concluding a consumer credit agreement, every lender is obliged to carry out a creditworthiness check. A consumer is considered creditworthy if he or she can repay the loan within 36 months with his disposable incomeThe necessary minimum living requirements must still be covered. This measure is intended to ensure that loans are granted responsibly and that borrowers are not overburdened.
Consequences of non-compliance with the law: fines and loss of entitlements
The KKG ensures that the rules are adhered to and provides for penalties for offences. Aggressive advertising can be penalised with fines of up to CHF 100,000. Violations of the KKG regulations, such as failing to carry out a proper credit check or failing to report loans, result in lenders losing their claims to interest and fees.
Conclusion: Focus on protection and responsibility
The KKG plays a crucial role in protecting borrowers from financial risks. It is an instrument that ensures that loans are granted responsibly and that the financial stability of borrowers is guaranteed. The correct application of the KKG is therefore of paramount importance to ensure that the Swiss financial system is based on principles of fairness and transparency.