Home Loan Regulations, 2011

L.N. 415 of 2011

CONSUMER AFFAIRS ACT

(CAP. 378)

Home Loan Regulations, 2011

IN exercise of the powers conferred upon him by article 7 of

the Consumer Affairs Act, the Prime Minister, after consultation

with the Consumer Affairs Council, has made the following

regulations:-

PART I

PRELIMINARY

(1) The title of these regulations is the Home Loan

Regulations, 2011.

(2) These regulations shall come into force on 1st

January 2012.

PART II

DEFINITIONS

[Regulations 8 and 15]

General Information on credit for home loans to be provided to the consumer

(a) identity and the geographical address of the creditor;

(b) where applicable, the identity and geographical address of the credit

intermediary involved;

(c) purposes for which the home loan may be used;

(d) forms of surety;

(e) description of the types of home loans available with a short description

of the differences between fixed and variable rate products, including related

implications for the consumer;

(f) a list of related cost elements, such as administrative costs, insurance costs,

legal costs, and where applicable, the costs of intermediaries;

(g) an indication of the cost of a typical home loan for the consumer;

(h) the different options available for reimbursing the credit to the creditor

(including the number, frequency and amount of the regular repayment instalments);

(i) whether there is a possibility of early repayment and, where applicable, a

description of the conditions attached to early repayment;

(j) the duration of the home loan agreement;

(k) indication of the currency or currencies in which the credit under the home

loan agreement are available, including an explanation of the implications for the

consumer where the credit is denominated in a foreign currency;

(l) the borrowing rate, the conditions governing the application of that rate

and, where available, any index or reference rate applicable to the initial borrowing

rate, as well as the periods, conditions, and procedures for changing the borrowing

rate; and if different rates apply in different circumstances, the above information

shall be supplied in respect of all the applicable rates;

(m) an indicative example of the total cost of credit for the consumer and

annual percentage rate of charge;

(n) whether a valuation of the property is necessary and, where applicable, by

whom it should be carried out;

(o) details on how to obtain information on tax relief on the home loan

agreement interest or other public subsidies.

B

For the purpose of these regulations:-

“the Act” means the Consumer Affairs Act;

“advertisement” means any form of representation,

including a catalogue, a circular and a price list, about a trade,

business, craft or profession in order to promote the supply

or transfer of goods or services, immovable property, rights

or obligations and the term “advertising” shall be construed

accordingly;

“ancillary service” means a financial service offered

to the consumer by the creditor or credit intermediary in

conjunction with the home loan agreement;

“annual percentage rate of charge” means the total

cost of the credit to the consumer expressed as an annual

percentage of the total amount of the credit granted and where

applicable including the costs referred to in regulation 8 of

these regulations.

“borrowing rate” means the interest rate expressed as a

fixed or variable percentage applied on an annual basis to the

amount of credit drawn down;

“consumer” means any individual who in transactions

and other matters covered by the Act or any regulations made

thereunder including these regulations, is acting for purposes

which are not related to and outside his trade, business, craft

or profession;

“creditor” means a natural or legal person who grants

or promises to grant credit in connection with home loan

agreements within the meaning of regulation 3 in the course

of his trade, business or profession;

“credit intermediary” means a natural or legal person

who is not acting as a creditor and who, in the course of

his trade, business or profession, for a fee, which may take

a pecuniary form or any other agreed form of financial

consideration

(a) presents or offers home loan agreements to

consumers;

(b) assists consumers by undertaking preparatory

work in respect of home loan agreements other than as

referred to in paragraph (a) above; or

(c) concludes home loan agreements with

consumers on behalf of the creditor;

“creditworthiness assessment” means the fair evaluation

of a consumer’s ability to meet his debt obligations;

“the Director General” means the Director General of

Consumer Affairs as defined in the Act;

“durable medium” means any instrument which enables

the consumer to store information addressed personally to

him in a way accessible for future reference for a period of

time adequate for the purposes of the information and which

allows the unchanged reproduction of the information stored;

“fixed borrowing rate” means that the creditor and the

consumer agree in the credit agreement on one borrowing rate

for the entire duration of the credit agreement or on several

borrowing rates for partial periods using exclusively a fixed

specific percentage. If not all borrowing rates are determined

in the credit agreement, the borrowing rate shall be deemed to

be fixed only for the partial periods for which the borrowing

rates are determined exclusively by a fixed specific percentage

agreed on the conclusion of the credit agreement;

“home loan agreement” means an agreement whereby

a creditor, directly or through a credit intermediary, grants

or promises to grant, to a consumer, a credit within the

meaning of regulation 3 of these regulations in the form of a

deferred payment or other similar financial arrangement;

“Member State” has the same meaning assigned to it in

the Act;

Provided that, costs in respect of ancillary services

relating to the home loan agreement, in particular insurance

premiums, are also included if, in addition, the conclusion of

a service contract is compulsory in order to obtain the credit

or to obtain it on the terms and conditions marketed;

“total amount of credit” means the ceiling or the total

sums made available under a home loan agreement;

“total amount payable by the consumer” means the sum

of the total amount of the credit and the total cost of the credit

to the consumer.

“total cost of the credit to the consumer” means all

the costs, including interest, commissions, taxes and any

other kind of fees and/or charge howsoever described, or to

whomsoever it is paid, which the consumer is required to pay

in connection with the home loan agreement and which are

known to the creditor, except for notarial costs;

PART III

SCOPE AND APPLICATION

[Regulation 8 (3) and (4)]

European Standardised Information Sheet (ESIS)

PART A

The text in this model shall be reproduced as such in the ESIS. Indications between

square brackets shall be replaced with the corresponding information. Instructions on

how to complete the ESIS are provided in Part B.

Wherever 'where applicable' is indicated, the creditor shall fill in the box if the

information is relevant to the credit agreement. Where the information is not relevant,

the creditor shall delete the information in question or the entire section. In the latter

case, the numbering of the ESIS sections shall be adjusted accordingly.

The below information shall be provided in a single document. The font used shall be

clearly readable. Bold font, shading or larger font sizes shall be used for the

information elements to be highlighted.

ESIS Model

(Introductory text)

This document was produced on [current date] in reply to your request for

information. This document does not constitute an obligation for us to grant

you a loan.

This document was produced on the basis of the information that you have

provided so far and on the current financial market conditions. The information

below remains valid until [validity date]. After that date, it may change in line

with market conditions.

1. Lender

[Name]

[Geographical address]

[Telephone number]

[E-mail address]

[Web address]

Supervisory authority: [Name and Web address of supervisory authority]

Contact person: [Full contact details of contact person]

2. Main features of the loan

Amount and currency of the loan granted: [value][currency]

(Where applicable) "This loan is not in [national currency]"

Duration of the loan: [duration]

[Type of loan]

[Type of applicable interest rate]

Total amount to be reimbursed

[Maximum available loan amount relative to the value of the property]

(Where applicable) [Security]

3. Interest rate

B

The APRC is the total cost of the loan expressed as an annual percentage. The

APRC is provided to help you to compare different offers. The APRC

applicable to your loan is [APRC]. It comprises

Interest rate [value in percentage]

[Other components of the APRC]

4. Frequency and number of payments

Repayment frequency: [frequency]

Number of payments: [number]

5. Amount of each instalment

[Amount] [currency]

(Where applicable) The exchange rate used for converting your repayment in

[credit currency] to [national currency] will be the rate published by [name of

institution publishing exchange rate] on [date].

6. Illustrative repayment table

This table shows the amount to be paid every [frequency].

The instalments (column [relevant no.]) are the sum of interest paid (column

[relevant no.]), capital paid (column [relevant no.]) and, where applicable other

costs (column [relevant no.]). Where applicable, The costs in the other costs

column relate to [list of costs]. Outstanding capital (column [relevant no.]) is

the amount of the loan that remains to be reimbursed after each instalment.

[Amount and currency of the loan]

[Duration of the loan]

[Interest rate]

[Table]

(Where applicable) [Warning on the variability of the instalments]

7. Additional obligations and costs

The borrower must comply with the following obligations in order to benefit

from the lending conditions described in this document.

[Obligations]

(Where applicable) Please note that the lending conditions described in this

document (including the interest rate) may change if these obligations are not

complied with.

In addition to the costs already included in the [frequency] instalments, this

loan entails the following costs

Costs to be paid on a one-off basis

Costs to be paid regularly

Please make sure that you are aware of all other taxes and costs (e.g. notary

fees) associated with this loan.

8. Early repayment

(Where applicable) You do not have the possibility to repay this loan early.

(Where applicable) You have the possibility to repay this loan early, either

fully or partially.

(Where applicable) [Conditions]

[Procedure]

(Where applicable) Exit charge

(Where applicable) Should you decide to repay this loan early, please contact

us to ascertain the exact level of the exit charge at that moment.

9. Internal complaint scheme

[Name of the relevant department]

[Geographical address]

B

[Telephone number]

[E-mail address]

Contact person: [contact details]

10. External complaint body

In the event of disagreement with the lender which remains unresolved the

borrower has the possibility to address a complaint to

[Name of the complaint body]

[Geographical address]

[Telephone number]

[E-mail address]

11. Non-compliance with the commitments linked to the loan

consequences for the borrower

[Types of non-compliance]

[Financial and/or legal consequences]

Should you encounter difficulties in making your [frequency] payments, we

invite you to contact us as quickly as possible to explore possible solutions.

(Where applicable) 12. Additional information in the case of distance

marketing

(Where applicable) The law taken by the creditor as a basis for the

establishment of relations with you before the conclusion of the credit contract

is [applicable law].

Information and contractual terms will be supplied in [language]. With your

consent, we intend to communicate in [language/s] during the duration of the

credit agreement.

13. Risks and warnings

• We draw your attention to the risks involved in taking out a home loan.

• (Where applicable) The interest rate of this loan does not remain fixed during

the whole duration of the loan.

• (Where applicable) This loan is not in [national currency]. Please note that the

amount in [national currency] that you will need to pay at each instalment will

vary in line with the [loan’s currency/national currency] exchange rate.

• (Where applicable) This is an interest-only loan. This means that, during its

duration, you will need to build up enough capital in order to reimburse the

loan amount at maturity.

• You will also need to pay other taxes and costs (where applicable), e.g.

notary fees.

• Your income may change. Please make sure that if your income falls you will

still be able to afford your [frequency] repayment instalments.

• (Where applicable) Your home may be repossessed if you do not keep up

with payments.

B

PART B

Instructions to complete the ESIS

In completing the ESIS, the following instructions shall be followed

Section 'Introductory text'

(1)

The validity date shall be properly highlighted.

Section '1. Lender'

(1)

Name, telephone number, geographical address and web address of the

creditor shall refer to the creditor’s headquarters. The relevant authority for

the supervision of lending activities shall be indicated.

(2)

Information on the contact person is optional.

(3)

In line with Article 3 of Directive 2002/65/EC, where the transaction is being

offered at a distance, the creditor shall indicate, where applicable, the name

and geographical address of its representative in the Member State of

residence of the borrower.

Indication of the telephone number, e-mail address and web address of the

representative of the credit provider is optional.

(4)

In line with Article 3 of Directive 2002/65/EC, where the transaction is

being offered at a distance, the creditor shall indicate the name of the trade

register in which the creditor is entered and its registration number or an

equivalent means of identification in that register.

Section '2. Main features of the loan'

(1)

The duration of the credit shall be indicated in years or months, whichever is

the most relevant. Where the duration of the credit can vary during the life of

the contract, the creditor shall explain when and under which conditions this

can occur.

The description of the type of credit shall clearly indicate how the capital and

the interest shall be reimbursed during the life of the credit (i.e. constant,

progressive or regressive reimbursements).

(2)

This section shall also explain whether the interest rate is fixed or variable

and, where applicable, the periods during which it will remain fixed; the

frequency of subsequent revisions and the existence of limits to the interest

rate variability, such as caps or floors. The formula used to revise the interest

rate shall be explained. The creditor shall also indicate where further

information on the indices or rates used in the formula can be found. Where

the credit currency is different from the national currency, the creditor shall

include information on the formula used to calculate the exchange rate spreads

and the frequency of their adjustment.

(3)

'Total amount to be reimbursed' shall be calculated as the sum of the credit

amount and the total cost of the credit.

(4)

'Maximum available loan amount relative to the value of the property' shall

indicate the loan-to-value ratio. This ratio is to be accompanied by an example

in absolute terms of the maximum amount that can be borrowed for a given

property value.

(5)

Where the credit will be secured by a mortgage on the property or another

commonly used guarantee, the creditor shall draw the borrower’s attention to

this.

Section '3. Interest rate'

(1)

In addition to the interest rate, all the other costs contained in the APRC shall

be listed (name and equivalence in percentage). Where providing a percentage

rate for each of those costs is not possible or does not make sense, the creditor

shall provide a global percentage rate.

Section '4. Frequency and number of payments'

(1)

Where payments are to be done on a regular basis, the frequency of payments

shall be indicated (e.g. monthly). Where the frequency of payments will be

rregular, this shall be clearly explained to the borrower. The number of

payments indicated shall cover the whole duration of the credit.

Section '5. Amount of each instalment'

(1)

The loan currency shall be clearly indicated.

(2)

Where the amount of the instalments may change during the life of the credit,

the creditor shall specify the period during which that initial instalment

amount will remain valid and when and how frequently afterwards it will

change.

(3)

Where the credit currency is different to the borrower’s national currency, the

creditor shall include numerical examples clearly showing how changes to the

relevant exchange rate may affect the amount of the instalments. The

illustrated exchange rate changes need to be realistic, symmetrical and include

at least the same number of unfavourable cases as favourable cases.

(4)

Where the currency used for the payment of instalments is different from the

credit currency, the exchange rate to be used shall be clearly indicated. Such

indications shall include the name of the institution publishing the exchange

and the moment at which the applicable exchange is calculated.

B

Section '6. Illustrative repayment table'

(1)

Where the interest may vary during the life of the credit, the creditor shall

indicate after the reference to the interest rate, the period during which that

initial interest rate will remain valid.

(2)

The table to be included in this section shall contain the following columns

'repayment moment', 'amount of the instalment', 'interest to be paid per

instalment', 'other costs included in the instalment' (where relevant), 'capital

repaid per instalment' and 'outstanding capital after each instalment'.

(3)

For the first repayment year the information shall be given for each instalment

and a subtotal shall be indicated for each of the columns at the end of that first

year. For the following years, the detail can be provided on an annual basis.

An overall total row shall be added at the end of the table and shall provide

the total amounts for each column. The total amount paid by the borrower (i.e.

the overall sum of the 'amount of the instalment' column) shall be clearly

highlighted and presented as such.

(4)

Where the interest rate is subject to revision and the amount of the instalment

after each revision is unknown, the creditor may indicate in the repayment

table the same instalment amount for the whole credit duration. In such a case,

the creditor shall draw that fact to the attention of the borrower by visually

differentiating the amounts which are known from the hypothetical ones (e.g.

using a different font, borders or shading). In addition, a clearly legible text

shall explain for which periods the amounts represented in the table may vary

and why. The creditor shall also include: (1) where relevant, the applicable

caps and floors; (2) an example of how the amount of the instalment would

vary where the interest rate increases or decreases by 1 % or by a higher

percentage, where this is more realistic given the magnitude of normal

changes to the interest rate and (3) where there is a cap, the instalment amount

in the worst-case scenario.

Section '7. Additional obligations and costs'

(1)

The creditor shall refer in this section to obligations such as the need to insure

the property, to purchase life insurance or to buy any other product or service.

For each obligation, the creditor shall specify towards whom and by when the

obligation needs to be fulfilled.

(2)

The creditor shall also list each of the costs by category, indicating their

amount, to whom they are to be paid and at what moment. Where the amount

is not known, the creditor shall provide a possible range or an indication of

how the amount will be calculated.

Section '8. Early repayment'

(1)

Where the credit may be repaid early, the creditor shall indicate under what

conditions, if any, the borrower can do so. The creditor shall also indicate the

steps the borrower should take in order to request the early repayment.

(2)

Where an exit charge will be applied to the early repayment, the creditor shall

draw the borrower’s attention to this and indicate its amount. In cases where

the amount of the exit charge would depend on different factors, such as the

amount repaid or the prevailing interest rate at the moment of the early

repayment, the creditor shall indicate how the exit charge will be calculated.

The creditor shall then provide at least two illustrative examples in order to

demonstrate to the borrower the level of the exit charge under different

possible scenarios.

Section '9. Internal complaint scheme'

(1)

Information on the contact person is optional.

Section '10. External complaint body'

(1)

In line with Article 3 of Directive 2002/65/EC, where the transaction is being

offered at a distance, the creditor shall also specify whether or not there is an

out-of-court complaint and redress mechanism for the borrower and, if so,

explain the methods of access to it.

Section '11. Non-compliance with the commitments linked to the credit

consequences for the borrower'

(1)

Where non-observance of any of the borrower’s obligations linked to the

credit may have financial or legal consequences for the borrower, the creditor

shall describe in this section the different possible cases (e.g. late

payments/default, failure to respect the obligations set out in Section 7

'Additional obligations and costs').

(2)

For each of those cases, the creditor shall specify, in clear, easily

comprehensible terms, the penalties or consequences to which they may give

rise. Reference to serious consequences should be highlighted.

Section '12. Additional information in the case of distance marketing'

(1)

Where applicable, this section will include a clause stipulating the law

applicable to the credit agreement and/or the competent court.

Section '13. Risks and warnings'

(1)

All the listed warnings shall be highlighted.

(2)

Where applicable, the creditor shall recapitulate in this section the general

interest rate revision rules and provide a quantitative example of how the

instalments would increase if the credit’s interest rate were to increase by X %

(as explained in section 'Illustrative repayment table') and/or in the worst-case

scenario (if there is a cap on the interest rate variability).

B

(1)

These regulations shall apply to the following

(a) Home loan agreements whereby a consumer

acquires or retains property rights in land or in an existing

or projected building for his own residence or that of his

dependants, which is secured either by a hypothec or by

another comparable security on immovable property or by a

surety.

(b) Home loan agreements whereby a consumer

reconstructs, renovates, alters or improves the residential

immovable property he owns or aims to acquire for his own

residence or that of his dependants, which agreements are not

covered by the Consumer Credit Regulations, 2010.

(2)

These regulations shall not apply to

(a) Home loan agreements which will eventually be

repaid from the sale proceeds of an immovable property.

(b) Home loan agreements where the credit is

granted by an employer to his employees as a secondary

activity where such a home loan agreement is offered free

of interest or at annual percentage rates of charge lower than

those prevailing on the market and not offered to the public

generally.

(c) Home loan agreements where the credit granted

is made available without payment of interest or any other

charge.

PART IV

OBLIGATIONS OF THE CREDITOR AND CREDIT

INTERMEDIARY

[Regulation 21]

Calculation of the annual percentage rate of charge

Basic equation expressing the equivalence of drawdowns on the one hand and

I.

repayments and charges on the other.

The basic equation, which establishes the annual percentage rate of charge (APRC),

equates, on an annual basis, the total present value of drawdowns on the one hand and

the total present value of repayments and payments of charges on the other hand, i.e.

where

X

is the APR,

m

is the number of the last drawdown,

k

is the number of a drawdown, thus 1 ≤ k ≤ m,

C k

is the amount of drawdown k,

t k

is the interval, expressed in years and fractions of a year, between the date of

the first drawdown and the date of each subsequent drawdown, thus t 1 = 0

m’

is the number of the last repayment or payment of charges,

l

is the number of a repayment or payment of charges,

D l

is the amount of a repayment or payment of charges,

S l

is the interval, expressed in years and fractions of a year, between the date of

the first drawdown and the date of each repayment or payment of charges.

Remarks

(a)

The amounts paid by both parties at different times shall not necessarily be

equal and shall not necessarily be paid at equal intervals.

(b)

The starting date shall be that of the first drawdown.

(c)

Intervals between dates used in the calculations shall be expressed in years or

in fractions of a year. A year is presumed to have 365 days (or 366 days for leap

years), 52 weeks or 12 equal months. An equal month is presumed to have 30.41666

days (i.e. 365/12) regardless of whether or not it is a leap year.

B

(d)

The result of the calculation shall be expressed with an accuracy of at least

one decimal place. If the figure at the following decimal place is greater than or equal

to 5, the figure at that particular decimal place shall be increased by one.

(e)

The equation can be rewritten using a single sum and the concept of flows

(Ak), which will be positive or negative, in other words either paid or received during

periods 1 to k, expressed in years, i.e.

S being the present balance of flows. If the aim is to maintain the equivalence of

flows, the value will be zero.

Additional assumptions for the calculation of the annual percentage rate of

II.

charge

(a)

If a credit agreement gives the consumer freedom of drawdown, the total

amount of credit shall be deemed to be drawn down immediately and in full.

(b)

If a credit agreement provides different ways of drawdown with different

charges or borrowing rates, the total amount of credit shall be deemed to be drawn

down at the highest charge and borrowing rate applied to the most common

drawdown mechanism for this type of credit agreement.

(c)

If a credit agreement gives the consumer freedom of drawdown in general but

imposes, among the different ways of drawdown, a limitation with regard to the

amount and period of time, the amount of credit shall be deemed to be drawn down

on the earliest date provided for in the agreement and in accordance with those

drawdown limits.

(d)

If there is no fixed timetable for repayment, it shall be assumed

(i) that the credit is provided for a period of twenty years, and

(ii) that the credit will be repaid in 240 equal instalments and at monthly

intervals.

(e)

If there is a fixed timetable for repayment but the amount of such repayments

is flexible, the amount of each repayment shall be deemed to be the lowest for which

the agreement provides.

(f) Unless otherwise specified, where the credit agreement provides for more than one

repayment date, the credit is to be made available and the repayments made on the

earliest date provided for in the agreement.

(g) If the ceiling applicable to the credit has not yet been agreed, that ceiling is

assumed to be EUR 180 000.

B

(h) If different interest rates and charges are offered for a limited period or amount,

the interest rate and the charges shall be deemed to be the highest for the whole

duration of the credit agreement.

(i) For credit agreements for which a fixed borrowing rate is agreed in relation to the

initial period, at the end of which a new borrowing rate is determined and

subsequently periodically adjusted according to an agreed indicator, the calculation of

the annual percentage rate shall be based on the assumption that, at the end of the

fixed borrowing rate period, the borrowing rate is the same as at the time of

calculating the annual percentage rate, based on the value of the agreed indicator at

that time.

B

€2.88

(1) A creditor shall take all necessary steps to ensure

full compliance with these regulations.

(2) For the purpose of this Part, unless otherwise

provided, the obligations of the creditor shall equally apply to

a credit intermediary where a credit intermediary presents or

offers home loan agreements to consumers, assists consumers by

undertaking preparatory work in respect of home loan agreements,

or concludes home loan agreements with consumers on behalf of

the creditor.

(3) Where a credit intermediary participates or

intends to participate in terms of sub-regulation (2) hereof, a credit

intermediary shall

(a) indicate in advertising and documentation intended

for consumers, the extent of his powers, in particular whether

he works exclusively with one or more creditors or as an

independent broker;

(b) disclose the fee, if any, payable by the consumer

for his services, which fee shall be agreed in writing or on

a durable medium between the consumer and the credit

intermediary before the conclusion of the home loan

agreement; and

(c) disclose the fee, if any, payable by the consumer to

the credit intermediary for his services to the creditor for the

purpose of calculating the annual percentage rate of charge.

(1) When granting, intermediating or advising on home Conduct of business

loans and, where appropriate, ancillary services to consumers, providing credit to

the creditor or the credit intermediary shall act honestly, fairly consumers.

and professionally in accordance with the best interests of the

consumer.

(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 best interests of the

consumer, as referred to in sub-regulation (1) hereof.

(1) Creditors and credit intermediaries, including Minimum competence

those registered in another Member State, shall ensure that requirements.

their management and staff shall possess an appropriate level of

knowledge and competence in relation to the offering or granting

of home loan agreements.

(2) The criteria for determining the appropriate level

of knowledge and competence referred to in sub-regulation (1)

shall be determined on the basis of

(a) recognized qualifications; and/or

(b) professional experience.

(3) Where the conclusion of a home loan agreement

includes an ancillary service related to it, in particular insurance

or investment services, management and staff shall also possess

appropriate knowledge and competence in relation to that ancillary

service.

(4) Creditors and credit intermediaries shall be

monitored in order to assess whether the requirements referred

to in sub-regulations (1) and (2) hereof are complied with on a

continuing basis.

(1) In good time before a home loan agreement is

concluded, a creditor, and where applicable a credit intermediary,

on the basis of the credit terms and conditions offered by the

creditor, and taking into account the preferences expressed

and information supplied by the consumer, shall provide to the

consumer the information identified under regulation 8 and listed

in the First Schedule, in order to assist the consumer in comparing

different offers and reaching an informed decision on whether to

conclude a home loan agreement with the creditor.

(2) Creditors and, where applicable, credit

intermediaries shall provide adequate explanations to the consumer

on the proposed home loan agreement and any ancillary services,

in order to place the consumer in a position enabling him to assess

whether the proposed home loan agreement is adapted to his needs

and financial situation.

(3) Such adequate explanations shall include an

explanation of the information and terms included in the pre-

contractual information to be provided in accordance with

regulation 8 and of the consequences that concluding the home

loan agreement may have for the consumer, including in the event

of default in payment by the consumer.

(1) General information about home loan agreements

shall be made available by creditors or, where applicable, credit

intermediaries at all times in a durable medium or in electronic

form, and as much as possible, in a plain and intelligible language

that can be easily understood by the consumer.

(2)

The general information shall include at least the

following

(a)

identity and the geographical address of the

creditor;

(b) where applicable, the identity and geographical

address of the credit intermediary involved;

(c) purposes for which the home loan may be used;

(d) forms of surety;

(e) description of the types of home loans available

with a short description of the differences between fixed and

variable rate products, including related implications for the

consumer;

(f) a list of related cost elements, such as administrative

costs, insurance costs, legal costs, and where applicable, the

costs of intermediaries;

(g) an indication of the cost of a typical home loan for

the consumer;

(h) the different options available for reimbursing the

credit to the creditor (including the number, frequency and

amount of the regular repayment instalments);

(i) a description of the conditions attached to early

repayment;

(j) the duration of the home loan agreement;

(k) indication of the currency or currencies in which

the credit under the home loan agreement are available,

including an explanation of the implications for the consumer

where the credit is denominated in a foreign currency;

(l) the borrowing rate, the conditions governing

the application of that rate and, where available, any index

or reference rate applicable to the initial borrowing rate, as

well as the periods, conditions, and procedures for changing

the borrowing rate; and if different rates apply in different

circumstances, the above information shall be supplied in

respect of all the applicable rates;

(m) an indicative example of the total cost of credit for

the consumer and annual percentage rate of charge;

(n) whether a valuation of the property is necessary

and, where applicable, by whom it should be carried out;

(o) details on how to obtain information on tax relief

on the home loan agreement interest or other public subsidies.

(3) The creditor and, where applicable, the credit

intermediary shall without undue delay after the consumer has

given the necessary information on his needs, financial situation

and preferences, provide the consumer with the personalised

information needed to compare the home loan agreements available

on the market, assess their implications and take an informed

decision on whether to conclude a home loan agreement.

(4) Such information shall be provided by means of a

duly completed personalised standard information sheet, hereafter

referred to as the European Standardised Information Sheet

(‘ESIS’), as set out in Second Schedule to these regulations. The

ESIS shall be drawn up on paper or on another durable medium.

(5) The information provided for in the First and

Second Schedules to these regulations, shall ensure that the home

loan agreement cannot be concluded until the consumer has had

sufficient time to compare the offers, assess their implications and

take an informed decision on whether to accept an offer.

(1) Before the conclusion of a home loan agreement,

the creditor shall assess the creditworthiness of the consumer on the

basis of sufficient information, where appropriate, obtained from

the consumer and, where necessary on the basis of a consultation

of a database, or other relevant internal or external sources.

(2) Where applicable, the creditor shall inform the

consumer in advance that a database is to be consulted.

(1) Where the assessment of the consumer ’s

creditworthiness results in a negative prospect for his ability to

repay the credit over the lifetime of the home loan agreement, the

creditor shall refuse credit.

(2) Where the credit application is rejected, the creditor

shall inform the consumer immediately and without charge of the

reasons for rejection.

(3) Where the home loan application is rejected on the

basis of the data contained, or lack thereof, in a database that has

been consulted, the creditor shall inform the consumer immediately

and without charge of the name of the database that was consulted

as well as of its controller and of his right to access and, where

necessary, his right to rectify his data in that database.

Provided that the creditor shall not be required to give

such information if the information to be provided is prohibited by

any other law, or is contrary to the public policy or public security

of Malta.

(4) Where the application is rejected on the basis of

an automated decision or a decision based on methods such as

automated credit scoring, the creditor shall inform the consumer

immediately and without charge.

(5) The creditor shall explain the logic involved in the

automated decision to the consumer.

(6) The consumer shall have the opportunity to request

for the decision to be reviewed manually.

If the parties agree to change the total amount of credit

after the conclusion of the home loan agreement, the creditor shall

(a) update the financial information at his disposal

concerning the consumer; and

(b) re-assess the consumer’s creditworthiness, before

the total amount of credit is significantly increased.

(1) Further to assessing a consumer’s creditworthiness,

creditors and credit intermediaries shall ensure that they obtain

the necessary information regarding the consumer’s personal and

financial situation, his preferences and objectives.

(2) Such considerations shall be based on information

that is up to date at that moment in time and on reasonable

assumptions as to the consumer’s situation over the term of the

proposed home loan.

Without prejudice to the provisions of the Data Collection and

Protection Act, personal data obtained from a consumer or any processing of data.

other person in connection with the conclusion and management of

any home loan agreement may only be processed for the purpose

of assessing the financial situation of the consumer or of any such

other person and their ability to repay.

PART V

RIGHTS OF THE CONSUMER

(1) The consumer shall be entitled to receive, free of

charge, a copy of the draft home loan agreement.

(2) Sub-regulation (1) does not apply if the creditor is,

at the time of the consumer’s request, unwilling to proceed to the

conclusion of the home loan agreement with the consumer.

(3) Without prejudice to the Notarial Profession and

Notarial Archives Act, on conclusion of the home loan agreement,

the consumer shall be entitled to receive a copy of the final

agreement which has been duly registered by the notary within a

period of fifteen days from the signing of the agreement.

(1) The agreement referred to in regulation 14(3)

of these regulations shall be drawn up in writing or on a durable

medium, and shall specify as much as possible, in a plain and

intelligible language that can be easily understood by the consumer,

the following

(a) the information listed under regulation 8(2)(c), (d),

(f), (h) to (l), and (n) of these regulations;

(b) the identities and geographical addresses of the

contracting parties as well as, if applicable, the identity and

geographical address of the credit intermediary involved;

(c) the annual percentage rate of charge and the total

amount payable by the consumer calculated at the time the

home loan agreement is concluded.

Provided that all the assumptions used in calculating that

rate shall be mentioned;

(d) the right of the consumer to receive, on request

and free of charge, at any time throughout the duration

of the home loan, a statement of account in the form of an

amortisation table.

Provided that the amortisation table shall

(i) indicate the payments owing and the periods

and conditions relating to the payment of such amounts;

(ii) contain a breakdown of each repayment

showing capital amortisation, the interest calculated on

the basis of the borrowing rate and where applicable any

additional costs;

(iii) where the interest is not fixed or the

additional costs may be changed under the home loan

agreement, it shall indicate clearly and concisely that

the data contained in the table will remain valid only

until such time as the borrowing rate or the additional

costs are changed in accordance with the home loan

agreement;

(e) if charges and interest are to be paid without capital

amortisation, a statement showing the periods and conditions

for the payment of the interest and of any associated recurrent

and non-recurrent charges;

(f) the interest rate applicable in the case of late

payments as applicable at the time of the conclusion of the

home loan agreement and the arrangement for its adjustment

and, where applicable, any charges payable for default;

(g) the procedure to be followed in exercising the right

of termination of the home loan agreement;

(h) information concerning the right resulting under

regulation 16 of these regulations and the conditions attached

to that right;

(i) whether or not there is an out-of-court procedure

for the consumer to make a complaint, the redress mechanism

available and the methods for having access to it;

(j) where applicable, other contractual terms and

conditions.

(2) (a) Should there be a change in the borrowing

rate, the creditor shall

(i) inform the consumer of such a change before

the change enters into force;

(ii) communicate the information in writing or on

a durable medium;

(iii) inform the consumer of the amount of

payments to be made after the entry into force of the

new borrowing rates; and

(iv) if the number or frequency of the payments

changes, provide the consumer with the particulars of

such payment changes.

(b) However, the parties may agree in the home

loan agreement that the information referred to in paragraph (a)

hereof is to be given to the consumer periodically in cases where

the change in the borrowing rate is caused by a change in a

reference rate, the new reference rate is made publicly available

by appropriate means, which may include a publication on

the creditor’s website or a public advert, and the information

concerning the new reference rate is also kept available in the

premises of the creditor.

(3) The creditor shall make available to the consumer,

free of charge and at any time throughout the duration of the home

loan, a statement of account in the form of an amortisation table.

(1) A consumer shall have the right to discharge his

obligations under a home loan agreement, in full or in part, before

the agreed termination.

(2)

If the consumer pays the credit before the agreed

termination

(a) the consumer shall be entitled to a reduction of the

remaining total costs of the credit; and

(b) the creditor shall be entitled to a fair and

objectively justified compensation for possible costs directly

linked to early repayment of credit as per agreement and the

information provided in regulations 8(2)(i), 15(1)(g) and

(h) of these regulations, so long as the early repayment falls

within a period for which the borrowing rate is fixed.

Provided that consideration shall also be given to the

impact of early repayment on administrative costs irrespective

whether the borrowing rate is fixed or variable.

(3) In determining the compensation for possible costs

directly linked to early repayment of credit referred to in sub-

regulation (2) hereof, a creditor or credit intermediary shall apply

the same calculations to all consumers irrespective of the reason

why early repayment was effected.

(1) Where the rights of the creditor under a home loan

agreement are, or the agreement itself is assigned to a third party,

the consumer shall be entitled to raise against that assignee any

defence available to him against the original creditor. Such defence

may also include the right to set-off.

Provided that set-off may only be raised in accordance

with the relevant provisions of articles 1196 to 1204 of the Civil Cap. 16.

Code, which shall apply irrespective of anything to the contrary

contained in a home loan agreement.

(2) The consumer shall be informed of the assignment

referred to in sub-regulation (1) hereof except where the original

creditor, by agreement with the assignee, continues to service the

credit vis-à-vis the consumer.

PART VI

OBLIGATIONS OF THE CONSUMER

(1) Consumers shall provide creditors and, where

applicable, credit intermediaries with complete and correct

information on their financial situation and personal circumstances

in the context of the home loan application process.

This information shall be supported, when necessary, by

documentary evidence from independently verifiable sources.

(2) In order for the creditor and, where applicable,

credit intermediaries to be able to conduct a thorough assessment

of the consumer’s creditworthiness and make a decision on

whether or not to grant the credit under the home loan agreement,

the creditors and, where applicable, credit intermediaries shall

at the pre-contractual phase, clearly specify the information,

including independently verifiable evidence where necessary, that

the consumer needs to provide.

(3) Creditors and, where applicable, credit

intermediaries shall state the timing by which consumers are

required to provide such information.

(4) In cases where the consumer chooses not to

provide the information necessary for an assessment of his

creditworthiness, the creditor or credit intermediary shall warn

the consumer that he is unable to carry out a creditworthiness

assessment and therefore that the home loan may not be granted.

This warning may be provided in a standardised format.

(5) This regulation is without prejudice to the

application of the Data Protection Act.

PART VII

MISCELLANEOUS

(1) Any advertising and marketing concerning home

loan agreements as set out in regulation 3 of these regulations shall

be fair, clear and not misleading within the meaning of articles 51C

and 51D of the Act. In particular, wording that may create false

expectations for a consumer regarding the availability or the cost

of a house loan shall be prohibited.

Without prejudice to the provisions relating to unfair

commercial practices under the Act, referred to in sub-regulation

(1) hereof, where a credit advertisement includes an interest rate

or any figure relating to the cost of the credit to the consumer, the

advertisement shall also include standard information by means

of a representative example in accordance with sub-regulation (2)

hereof.

(2) The representative example referred to in sub-

regulation (1) hereof shall comprise the following items of

information

(a) the identity of the creditor or, where applicable, the

credit intermediary;

(b) that the product advertised is a home loan

agreement and, where applicable, is secured either by a

hypothec or by another comparable security on immovable

property or by a surety;

(c) the borrowing rate, whether fixed, variable or both;

(d) particulars of any charges included in the total cost

of credit to the consumer;

(e) the total amount of credit;

(f) the annual percentage rate of charge;

(g) the duration of the agreement;

(h) the total amount payable by the consumer;

(i) if applicable, the amount of the instalments and the

amount of each repayment of credit; and

(j) a warning, where applicable, concerning the risk of

losing the immovable property in the event of non-observance

of the commitments linked to the home loan agreement.

The standard information shall be easily legible or

clearly audible as appropriate, depending on the medium used

for advertising and marketing.

(3) (a) A home loan advertisement shall include a

clear and concise statement in respect of any obligation to enter

into a contract in respect of an ancillary service relating to the

home loan, in particular an insurance service, where

(i) the conclusion of that service is compulsory in

order to obtain the credit or to obtain it on the terms and

conditions advertised; and

(ii) the cost of that service cannot be determined in

advance.

(b) The obligation referred to in paragraph (a)

hereof shall be advertised in a prominent way and accompanied by

the annual percentage rate of charge.

(1) A creditor or credit intermediary from another

Member State who intends to or has entered into a home loan

agreement with a consumer in Malta, shall have access under

the conditions as a Maltese creditor, to the databases which are

available in Malta in order to assess the creditworthiness of the

consumer

Such databases comprise databases operated by private

credit bureaux or credit reference agencies and public credit

registers.

Provided that a request by a creditor or credit

intermediary for access to the said database may be refused by

the holder of the database if the information to be provided is

prohibited by any other law, or is contrary to the public policy or

public security of Malta.

(2) This regulation is without prejudice to the

application of the Data Protection Act.

(1) The annual percentage rate of charge means the

total cost of the credit under the home loan agreement to the

consumer, expressed as an annual percentage of the total amount of

credit.

(2) The annual percentage rate of charge, equating,

on an annual basis, to the present value of all commitments

(drawdowns, repayments and charges), future or existing, agreed

by the creditor and the consumer, shall be calculated in accordance

with the mathematical formula set out in the Third Schedule to

these regulations.

(3) For the purpose of calculating the annual percentage

rate of charge, the total cost of the credit to the consumer under the

home loan agreement shall be determined excluding any charges

payable by the consumer for non-compliance with any of his

commitments laid down in the home loan agreement.

(4) The following costs shall be included in the total

cost of credit to the consumer

(a) the opening of an account, where it is obligatory in

order to obtain the credit under the home loan agreement;

(b) the costs of maintaining an account recording both

payment transactions and drawdowns;

(c) the costs of using a means of payment for both

payment transactions and drawdowns on that account; and

(d) other costs relating to payment transactions, unless

the costs have been clearly and separately shown in the home

loan agreement or in any other agreement concluded with the

consumer.

(5) The following costs shall be excluded from the

total cost of credit to the consumer

(a) notarial costs;

(b) costs associated with the provision of security;

(c) stamp duties; and

(d) costs related to property valuation.

(6) The calculation of the annual percentage rate

of charge shall be based on the assumption that the home loan

agreement is to remain valid for the period agreed and that the

creditor and the consumer will fulfil their obligations under the

terms and by the dates specified in the home loan agreement.

(7) In the case of home loan agreements containing

clauses allowing variations in the borrowing rate and, where

applicable, in the charges contained in the annual percentage rate

of charge but unquantifiable at the time of calculation, the annual

percentage rate of charge shall be calculated on the assumption that

the borrowing rate and other charges will be calculated at the level

set at the signature of the contract.

(8) Where necessary the additional assumptions set

out in the Third Schedule to these regulations shall be used in

calculating the annual percentage rate of charge.

It shall be the responsibility of the Director General

under these regulations to

(a) monitor the working and effectiveness of these

regulations and to take such measures as he deems necessary

in order to ensure compliance with these regulations;

(b) supervise the creditors and credit intermediaries,

and ensure that there is compliance by them with the

obligations identified under these regulations; and

(c) ensure that the rights granted to consumers by

these regulations are not diminished by the provision of any

other law.

(1) The Director General may impose an administrative

fine, issue such order, or decision or take such measure as he deems

appropriate in terms of the Act, upon any person who contravenes

or fails to comply with any of the provisions of these regulations.

(2) Any person who contravenes any provision of

these regulations shall be guilty of an infringement punishable by

an administrative fine of not less than one thousand euro (€1,000)

and not exceeding forty-five thousand euro (€45,000).

(3) In the case of non-compliance with a compliance

order, the Director General may impose a daily fine of not less than

one hundred and thirty euro (€130) and not more than two hundred

and thirty euro (€230) for each day of non-compliance.

(4) In determining the amount of the administrative

fine specified in this regulation, the Director General shall be

guided by the following considerations

(a) for infringements under these regulations, the basic

amount of the fine shall be twenty thousand euro (€20,000)

Provided that the Director General may, in setting the

fine, take into account circumstances that may lead to an

increase or decrease in the basic amount

Provided further that the Director General shall do so on

the basis of an overall assessment which takes into account all

the relevant circumstances, including the value of the credit

under the home loan agreement and the turnover of the

creditor;

(b) the Director General may impose a higher

administrative fine than the basic amount where there are

aggravating circumstances, having regard, in particular, to the

gravity and duration of the infringement and, or to the amount

of gains improperly made as a result of the infringement;

(c) without prejudice to the generality of paragraph

(b) hereof, the following shall in all cases be deemed as

aggravating circumstances

(i)

a second or subsequent infringement;

(ii) where the infringement constitutes an unfair

commercial practice in terms of the Act; and

(d) the basic amount may be decreased where the

Director General finds that there are mitigating circumstances

in particular

(i) where the creditor or the credit intermediary,

as the case may be, provides evidence that he terminated

the infringement concerned prior to or as soon as the

Director General commenced an investigation;

(ii) where the creditor or the credit intermediary,

as the case may be, provides evidence that he has taken

adequate steps to reduce the negative effects of the

infringement; and

(iii) where the creditor or the credit intermediary,

as the case may be, who is served with a notice in

terms of article 106A(5) of the Act, elects to pay the

administrative fine without contestation

Provided that this paragraph shall not apply in the

case of a second or subsequent infringement.

(5) In discharging his functions under these

regulations, the Director General shall have the same powers of

investigation and enforcement as prescribed under the Act.

(6) Any person who feels aggrieved by a decision,

order, administrative fine or measure taken by the Director General,

may file an appeal before the Appeals Tribunal established in terms

of article 31 of the Malta Competition and Consumer Affairs

Authority Act, and articles 110B to 110G of the Act shall mutatis

mutandis apply.

(1) The provisions of these regulations shall prevail Regulations to

and apply notwithstanding anything to the contrary contained in prevail.

any home loan agreement entered into by the consumer.

(2) Any waiver by the consumer of any of the rights

granted to him by these regulations shall be null and void.

(3) Notwithstanding any provision in the home loan

agreement to the effect that the applicable law to the home loan

agreement shall be the law of a non-Member State, the protection

granted by these regulations shall continue to apply where the

home loan agreement has a close link with Malta or any other

Member State.

(1) The Consumer Credit Regulations, 2005, are

2005. hereby being revoked.

(2) Without prejudice to sub-regulation (1) hereof,

agreements entered into under the Consumer Credit Regulations,

2005, before the coming into force of these regulations, shall

remain in force and be regulated by the terms and conditions

applicable thereto.

B