Bank of Lithuania
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For multiple legal violations, related to unduly assessing their customers’ solvency, the consumer credit undertaking UAB 4finance, using the trademarks SMSCredit and Vivus, was removed from the list of consumer credit lenders today. This means that the undertaking will no longer be able to grant credit. Persons who have previously received consumer credit from UAB 4finance shall have to repay them in accordance with the terms and conditions indicated in their agreements.

‘The most stringent statutory sanction was applied for multiple violations of legal acts and for non-compliance with the supervisory institution’s instructions to eliminate them. The irresponsible lending by this major fast credit market player, without complying with the requirements of legal acts, is unjustifiable. Cases of non-compliance with legal acts undermine confidence in the financial system, its participants; therefore this was not and in the future will not be tolerated,’ said Vytautas Valvonis, Director of the Supervision Service of the Bank of Lithuania.

The inspection of UAB 4finance, performed in 2015, had confirmed once again that this undertaking did not act in accordance with the obligations of a consumer credit lender — to lend responsibly, complying with the requirements of legal acts; as a result, consumer credits were granted to persons, who should not have received them if the undertaking had been in compliance with the requirements of the Law on Consumer Credits.

After removing UAB 4finance from the public list of consumer credit lenders, the situation of the consumer credit borrowers has not changed, as the consumer credit agreements concluded by them shall remain in force. UAB 4finance has the right to enforce existing consumer credit agreements, while consumers are still obligated to repay the consumer credit granted to them, continue to pay the contributions in accordance with the contractual terms and conditions and order, as well as fulfil the other obligations deriving from the consumer credit agreement.

Credit holders should also be aware that by their request UAB 4finance has the right to implement changes in the existing consumer credit agreements (change the contribution payment schedule, consumer credit repayment date, etc.), apart from changes that would lead to an increase in the amount of an already granted consumer credit — the amount of the consumer credit cannot be increased. The undertaking also does not have the right to conclude new consumer credit agreements, in cases when the consumer has already submitted to the undertaking a request for the granting of a consumer credit.

The Bank of Lithuania’s Supervision Service has identified multiple violations, which show that UAB 4finance is systematically non-compliant with the requirements of the Law on Consumer Credit; therefore, enforcement measures have been applied more than once. In 2012, the Bank of Lithuania warned UAB 4finance that the undertaking had violated the requirements of the aforementioned Law and disregarded the responsible lending principle enshrined in it. In 2013, the Bank of Lithuania imposed an LTL 15,500 (EUR 4,489) fine on UAB 4finance for the undertaking not acting in accordance with the responsible lending principle and unduly assessing the solvency of the credit borrower. The Bank of Lithuania received a statement that UAB 4finance had issued, without assessing their solvency, a consumer credit to the applicant’s grandson, who was a student at a vocational school and did not have any income. The Bank of Lithuania researched this case and established that UAB 4finance had not verified whether the credit borrower had a stable income and whether the amount of the repaid loan would not exceed 40 per cent of their income. After litigation, the Administrative Court of Lithuania confirmed, on 30 September 2015, that the undertaking was rightly punished.

In addition, in August 2015, the Board of the Bank of Lithuania, in accordance with the provisions of the Code of Administrative Violations of Law, imposed a fine of EUR 3,620 on the head of UAB 4finance for the fact that the undertaking headed by him had not submitted on time to the Bank of Lithuania the information necessary to perform an inspection of the undertaking. This information is necessary for the Bank of Lithuania to fully investigate whether an undertaking properly assesses customer solvency and complies with responsible lending principles, i.e. are credits granted to those who have stable income and are capable of repaying, are current liabilities assessed in granting new loans, and is the potential borrower’s credit history taken into account. The Court of First Instance, having examined the complaint of the head of UAB 4finance, stated that there is no basis to revoke the contested decision of the Board of the Bank of Lithuania or change it for the reasons indicated in the complaint.

According to data of the three quarters of 2015, UAB 4finance covers the largest share (37.8%) of the consumer credit market in the number of amounts of granted consumer credits (excluding linked consumer credit agreements). The undertaking, through a company in Latvia, belongs to the international finance group 4finance Holding S.A., which is registered in Luxembourg. UAB 4finance is a member of Lithuania’s Association of Small Consumer Credits.