2018-04-23
Swedbank, AB will indemnify inadequately informed clients for possible losses after Bank of Lithuania inspection
After a Bank of Lithuania’s target inspection, Swedbank, AB committed itself to indemnify the losses for its clients who were inadequately informed about the interest rate increased during the change of their credit card agreement.
In the second half of last year, the Bank of Lithuania carried out a target inspection of Swedbank, AB and identified cases when clients for whom the Bank of Lithuania increased the credit card limit were not adequately informed that, when changing the terms and conditions of their credit card agreement, not only the credit limit but also the interest rate was increased for them.
Almost 14 thousand credit card agreements were changed in January 2016–May 2017: in 11 thousand cases, after increasing a credit limit, the interest rate remained unchanged or was reduced, but in 3 thousand cases the increase of credit limit was followed by an increase of the interest rate as well. Under the Law on Consumer Credit, a consumer credit grantor must, prior to the conclusion of a contract, provide the client with sufficient information on, and explanations to, basic credit terms and conditions, including the interest rate on consumer credit.
In order to find out whether Swedbank, AB duly discharged this obligation, Bank of Lithuania specialists selected 278 credit card agreements concluded in March–May 2017, under which the interest rate was raised by 0.5–5 percentage points. The Bank of Lithuania applied to those clients with a request to indicate whether, prior to signing the agreement, they were informed about the change of the interest rate as well.
122 clients of the Bank were surveyed: 63 said they knew and 50 – they did not know that the interest rate for them was fixed higher than that specified in the initial credit card agreement.
The inspection showed that all those 50 clients of the Bank, prior to signing a consumer credit agreement, also signed a sheet with standard information specifying a new interest rate. During the inspection it was established, however, that, in some cases, the oral or written information the clients received from the Bank’s employees was inaccurate or even misleading.
It should be noted that, during the inspection, Swedbank, AB actively cooperated with the employees of the Bank of Lithuania and started improving customer service in order to ensure adequate information of clients about any changes in the terms and conditions of their consumer credit agreement.
Having considered all factors, the Bank of Lithuania obligated Swedbank, AB to stop violating the Law on Consumer Credit. The Bank has already done that.
Clients for whom the interest rate was increased during the change of their credit card agreement from January 2016 and who believe they were inadequately informed about the change of the interest rate in their credit card agreement should apply to Swedbank, AB.
Upon assessment of each client’s case on an individual basis, it will decide whether the client was adequately informed about the change of the interest rate and will take a decision regarding indemnity.
The Bank of Lithuania once again urges all residents to analyse in detail the terms and conditions of agreements on financial products prior to signing them.