S.L. 378.10 Art. 5Conduct of business obligations when providing credit to consumers.

(1) When manufacturing credit products falling within the scope of these regulations in accordance with regulation 3, or granting, intermediating or providing advisory services on credit and, where appropriate, ancillary services to consumers or when executing a credit agreement, the creditor and, or the credit intermediary shall act honestly, fairly, transparently and professionally, taking account of the rights and interests of the consumers: Provided that in relation to the granting, intermediating or provision of advisory services on credit and, where appropriate, of ancillary services, the activities shall be based on information about the consumer’s circumstances and any specific requirement made known by a consumer and on reasonable assumptions about risks to the consumer’s situation over the term of the credit agreement:

Provided further that in relation to such provision of advisory services, the activity shall in addition be based on the information required under regulation 8B(3)(a).

(2) Creditors and credit intermediaries shall ensure that the manner in which their staff and the relevant credit intermediaries are remunerated does not impede compliance with the obligation to act in accordance with the obligation set out in sub-regulation (1).

(3) When establishing and applying remuneration policies for staff responsible for the assessment of creditworthiness, creditors shall comply with the following principles in a way and to the extent that is appropriate to their size, internal organisation and the nature, scope and complexity of their activities:

(a) the remuneration policy is consistent with and promotes sound and effective risk management and does not encourage risk-taking that exceeds the level of tolerated risk of the creditor;

(b) the remuneration policy is in line with the business strategy, objectives, values and long-term interests of the creditor, and incorporates measures to avoid conflicts of interest, in particular by providing that remuneration is not contingent on the number or proportion of applications accepted;

(4) Creditors and credit intermediaries providing advisory services shall ensure that the remuneration structure of the staff involved does not prejudice their ability to act in the consumer’s best interest and in particular is not contingent on sales targets.