In accordance with Act No. 6/1993 Coll., on the Czech National Bank, the Czech National Bank is responsible for supervising compliance with the rules of consumer protection on the financial market by selected entities.
The CNB’s responsibilities in the consumer protection area
The CNB supervises compliance with the following duties in the consumer protection area:
- Prohibition of unfair commercial practices.
According to the definition given in the Consumer Protection Act, the commercial practices of an entrepreneur in respect of a consumer are deemed to be unfair if they are contrary to the requirements of professional diligence and are capable of appreciably affecting the consumer’s decision-making, thereby causing him to take a transactional decision that he would not have taken otherwise. Such practices are prohibited.
- Prohibition of consumer discrimination.
Under the Consumer Protection Act, sellers may not discriminate against consumers in the provision of services. Generally, discrimination means intentional or negligent differentiation, exclusion, restriction or preference on discriminatory grounds.
- Duties and rules for providing information about the prices of services and how those prices are set. According to pricing regulations, the seller has the duty to inform the consumer about the prices of services provided or to make such information appropriately available in some other way.
- Duties laid down in the Civil Code regarding distance contracts for financial services.
This concerns contracts concluded using means of distance communication (telephone, fax, e-mail or the internet). Although this method of communication is consumer-friendly, the opportunity to gain information is more limited than when dealing with a financial services provider. The Civil Code thus specifies in detail the scope of information that must be provided.
- Information duties of payment service providers. Pursuant to the Payment System Act, payment service providers (e.g. banks) must comply with various information duties, in particular before concluding a master agreement on payment services (e.g. a contract on maintenance of an account).
- Duties laid down in the Consumer Credit Act. When offering and providing consumer credit, intermediaries and providers of such credit must comply with a whole range of duties stipulated by law.
In supervising compliance with consumer protection, the CNB also takes into account compliance with the rules laid down in the Civil Code regarding consumer contracts, where non-compliance may have consequences under private law, e.g. invalidity of such contractual provisions.
However, the CNB may supervise consumer protection only in entities it is obliged to supervise under the Act on the CNB. Supervision of consumer protection in entities not supervised by the CNB (e.g. most non-bank consumer credit providers and financial advisers) is performed by the Czech Trade Inspection Authority.
This means the following entities:
- banks and foreign bank branches;
- credit unions;
- investment firms;
- investment intermediaries;
- insurance companies;
- pension funds;
- insurance intermediaries;
- independent loss adjusters;
- some other financial institutions
As supervision of consumer protection focuses on the practices of businesses in respect of consumers, the sufficiency of the information provided and adequate professional care, it is essential to receive suggestions from consumers, as the public’s submissions are an important source of information for the conduct of supervision.