Decree on Financial Consumer Protection

Lao People's Democratic Republic
Peace Independence Democracy Unity Prosperity Government No. 225/GOV Vientiane Capital, dated 06 April 2020 (Unofficial Translation) Decree on Financial Consumer Protection

• Pursuant to the law on Government No 04/NA, on 08 November 2016;
• Pursuant on the law on consumer protection No 02/NA, on June 30 2010;
• Pursuant to the request of the Bank of the Lao PDR, No 115/Bol 24 March 2020.
  Government Issues the decree:
  Chapter 1
  General Provision
  Article 1 Purpose
  This decree defines principles, rules and measures on administration and supervision of financial consumer protection in order for transparency, fairness and precision to aim at entrustment for financial system and contribution socio-economic development.
  Article 2 Financial consumer protection
  The protection of financial consumer is application of the measurements of financial consumer's legitimate asset, right and interest that is affected from financial service consumption.
  Article 3 Terms
  The terms use in this decree shall have the following meaning:
  1 Consumer means domestic and aboard individual, legal entity or organization that consume financial service; 2 Service provider means commercial banks, deposit taking Micro financial institution, non-deposit taking Micro financial institution, leasing company, pawnshop and other financial service provider that is under supervision of the Bank of the Lao PDR; 3 Bundle products means financial service that is tied more than two products as one packet products; 4 Cards means payment instruments comprising of debit and credit cards used to pay for goods, services and financial transactions via internet or a payment terminal such as Point of Sale machine (POS), Automatic Teller Machine (ATM) and Automatic Cash Deposit Machine (ADM);

5 Price means financial service providing remuneration such as: interest, service fee, fee, agent fee in which is not included fined interest; 6 Fined interest means sum of money that financial service consumer has to pay to the financial service provider in case abuse contract in whole or partially base on condition and ratio that are agreed between consumer and provider before or after signing contract.
Article 4 State Policy on financial consumer protection
The State supports and promotes on financial customer protection by raising awareness and understanding on financial service, human resource development, equipment providing and convenience condition to concerned organizations to be able to perform effectively.
Article 5 Principle on financial consumer protection
The principle on financial consumer protection shall be conduct as follow:
1. Respective and fair operation;
2. Ensuring the quality and transparency of financial service;
3. Financial service awareness for consumer;
4. Ensuring financial soundness.
Article 6 Scope of application of the decree
This decree enforces to service provider, consumer and financial service consumer protection authority in the Lao PDR.
Article 7 International cooperation
The State promotes the relation and cooperation with foreign countries, regional and international communities in relation to financial service consumer protection through exchanging experience, information, seminar, capacity building on technical in order to develop the financial consumer protection efficiently and effectively as well as implementation of international treaties and conventions which Lao PDR is bound.
Chapter 2
General principles on financial consumer protection
Article 8 Protected financial service
Financial services that consumers will be protected as:
1. Deposit taking which includes certificate of deposit issuing;
2. Loan providing;
3. Card services;
4. Leasing;
5. Pledge/Factoring;
6. Payment services;
7. Foreign Exchange;
8. Other service as license from the Bank of the Lao PDR.
Article 9 Risk management of service provider
The service provider shall have appropriate and strict rules, method and process for risk management in financial service providing by setting plan and system of risk undertaking that might occur especially risks of price, market and product distribution.
Article 10 Suitable determination and price of product

Service provider shall define the suitability and price of its product in order to appropriate for each target customer as well as their product consuming ability. Service provider shall have internal written regulation for defining appropriations of product, fee, service fee, representative fee, interest rate and other fee based on law and regulation concerned; and shall record factors on price defining of each service.
Article 11 Financial service information disclosure
Service provider shall disclose its financial service in form of printing and/or electronic one which is easy to be accessed with providing its content as follow:
1. fee, service fee, agent fee (If any), interest rate and other fee that shall be
compiled and stored with advertisement sector;
2. the impacts that raised in changing interest rate, exchange rate or other factor
which caused the price, return and other changing condition of the financial service;
3. product retribution;
4. term of contract and repayment schedule;
5. condition for contract in case customer request to terminate or unable to
implement the contract;
6. significant risk that related to the financial service;
7. information on other similar product (if any);
8. confidential information of customer.
Financial service information disclosure shall be mainly in Lao Language with using clear, accurate and understandable words and phrases. The size and color of all text shall be clear and can be read particularly consumer's right and duty that might be gained and implemented. Such message shall be true, correct and related to the product and determined where seeing easily. Advertisement or information disclosure shall not lead people to misunderstand. In case the financial service includes the fee, service fee or other charge shall not use word 'free' or other similar word or term. In case the product might contain risk or uncertainty shall not use the word "guarantee" or other similar terms. Bundle product offering shall be disclosed in detail of information on the interest would gain or additional charge comparing to buy the same product purchasing. Consumer can choose any product in the bundle product, except service provider able to show that other product in the bundle product is a main part of risk reducing of the product.
Article 12 Service to consumer
Service provider shall provide the service to its consumer as follow:
1. service without discriminate on national, ethnic, gender and religion;
2. service to consumer in written contract which includes:

• names and addresses of contractual parties;
• condition in using financial service;
• right and duty of consumer;
• fee, service fee and fine (if any);
• consumer confidentiality;
• dispute settlement;
• right of contract termination, and condition and of the termination and
  method;
• effect of contract termination.
  3. clear detail of product;

4. offer suitable alternative (if any) for consumer in order to able predicting the
outcome and lost by herself/himself before choosing any financial service;
5. do not hide any information that is generated the benefit for service provider
but caused the lost to consumer;
6. serve fairly and based on information of product disclosed or advertised.
Service provider shall not charge any fee or service fee undisclosed;
7. supply all necessary document for consumer such as: draft contract and
original copy of contract after the customer signed as well as related document, and advance notice of the contract termination to the customer;
8. provide an appropriate period for the customer to consider before signing or
cancelling the contract. The customer be able to deny to sign or cancel the contract during such period in which service provider might request reasonable compensation from the customer for its real damage. In any change of marketing promotion condition, the service provider shall notify the consumer before such change comes into effect. In circumstance illiterate or visual impaired customer there shall have staff to explain or read the contract and other document concerned to such party before signing the contract or use representative to sign the contract on behalf the customer.
Article 13 Storing consumer's information
The information of consumer is personal data, financial information, passwords such as: passwords of ATM card, E-banking and mobile banking. Service provider shall store the customer's data and shall not disclosure to other person without permission or non-authorized organization concerned. The customer's data might be stored in hardcopy and electric forms. Service provider shall inform and instruct the clients about safeguard the password. In case the passwords of consumer is leaked or disclosed without permission, service provider shall record and inform to affected consumer immediately. In the case the leaked and disclosed information cause significant or widespread affects, the service provider shall make record and report to the financial customer protection supervisory authority immediately. Service provider may disclose information of consumer to third party if it is consented in written from consumer. In the case of disclosure is made for the authority concerned shall strictly follow with the law related.
Article 14 Receiving and settlement the request of consumer
Service provider shall set up internal mechanism to handle complaint from consumer on its providing service such as: opinion, argument, or misunderstanding by setting unit or allocating officer to receive, ascertain and response to the complaint. Service provider might set up communication channels to customer especially in written or oral communication channels. Service provider shall provide contact information of the unit or officer as well as contact information of financial consumer protection supervisory authority in every contract document, and declare to the public on the method and process of proposing the complaint by posting the declaration at its office as well as its branch, service unit or on its website. Service provider shall response to the consumer's complaint as following process:
1. Receive, record and ascertain the complaint;
2. Settle the complaint immediately if the complaint is true and reasonable;

3. Search for additional information in case the consumer's complaint is not clear
and cannot find the conclusion, and response to the consumer in every fifteen days on the progress;
4. Inform in written solution to the consumer.
Article 15 Professional competence
Service provider shall ensure that its employee and agent who perform financial service is qualified, capable and experienced, ethic and respect to consumer, sincere in reporting complete and accurate financial information. Service provider shall set up manual on service to consumer as well as train its employee and agent and evaluate employee and agent frequently to ensure the service quality. Service provider shall monitor the activity of its employee and agent in providing financial service to consumer.
Chapter 3
Particular regulation on financial consumer protection
Article 16 Deposit taking
In deposit taking, service provider shall comply with:
1. Draft service contract based on the content in article 12 No 2 of this decree
which include conditions of deposit taking, using, withdrawing, suspending, cancelling account, and the deposit interest and fee of deposit account;
2. Disclose or post clear and accurate interest rate of each type deposit;
3. Do not deny withdrawing of the customer or take so much time unreasonably
when consumer withdraw in the day of contract end;
4. Treat to consumer equally transparently and comply with the law and
regulation in case of distribution of gifts or giveaways or lucky draw from deposit account;
5. No account maintenance fee from zero balance account but may close such
account as regulation issued by the Bank of the Lao PDR;
6. Inform consumer by stipulate in the contract and read it to consumer in case of
collecting account maintenance fee on low balance account;
7. Close unperformed account following with regulation of the Bank of the Lao
PDR;
8. Compensate for the lost to the consumer in case consumer's money in the
account got lost without their fault.
Article 17 Credit providing
Before credit providing, service provider shall compile income and expense statements and financial status of the consumer in detail which are described on assets, liabilities and collateral. In subsequently the consumer may not be able to repay the loan or debt obligations which is excess his/her income, the provider shall explain and recommend the appropriate options to the consumer to prevent excessive debt. If the provider seen that the consumer definitely unable to repay debt, the service provider shall deny such credit request. In applying the credit, the service provider shall make written contract which contains the main content as follow:
1. Credit line, which is defined in numbers and letters acutely and clearly;
2. Conditions of withdrawal or use of the credit line;

3. Terms of principle and regular interest repayments, fining interest and fees (if
any);
4. Interest's formula and calculation, in the case of applying a fixed interest rate
calculation mode, the provider shall offer information on the actual amount of interest and the annual interest rate;
5. Effect of default on principal and interest repayments;
6. Condition for early repayment;
7. Conditions for collateral withdraw.
The process of monitoring and collecting loans with consumers shall not use force, intimidation or illegal violence. In case the consumer repays the debt, the service provider shall deduct the outstanding principle and interest prior deduction the fee or other service fees. In case of multiple pending debts, the provider shall deduct the maximum credit line first or depend on the request of the consumer.
Article 18 Card service
On the card service, the provider shall perform the following:
1. Contract card service with the following contents:

• Card features, using instruction and restrictions;
• Fees for cash withdrawal, and card using for domestic and abroad;
• Responsibilities and obligations of service provider and customer in case of
  card lost, suspended, stolen or card information stolen;
• Determine the debt ratio or the amount to be repaid monthly in circumstance
  of the credit card.
  2. Keep card codes securely and confidentially;
  3. Be responsible for any damage that occurs during the delivery of the card and
  the card code to the consumer;
  4. Given the opportunity for the consumer to suspend or cancel card using at any
  time without any fees.
  Article 19 Lease, mortgage, payment services, currency trading and other services
  In the providing of lease, mortgage, payment and currency trade services, the service provider shall comply with the general rules set forth in the second chapter of this Decree, and the relevant law and regulation.
  Chapter 4
  Rights and obligations of provider and consumer
  Article 20 Rights and obligations of service provider
  Rights and duties of service provider are as follow:
  1. provide financial services as the frame of permitted activity (ies);
  2. define appropriate policies, rules and procedures for risk management that
  might cause of lost to consumer in using its service;
  3. evaluate the appropriateness of financial services for group target consumer;
  4. advertise or disclose information on financial services completely, accurately
  and clearly in order for consumer to acknowledge and understand before deciding to use the service;
  5. provide services to consumer truly, transparently and fairly;

6. establish internal mechanisms to receive and settle the complaint of the
customer as well as to cooperate in such issue;
7. keep consumer's information confidentially;
8. report on consumer protection activity to the Bank of the Lao PDR on a regular
basis. In case of any problem that may affect a wide range of consumers, it shall be reported to the Bank of the Lao PDR as urgency;
9. exercise rights and perform other obligations in accordance with laws and
regulations.
Article 21 Rights and Obligations of Consumers
Rights and duties of consumer are as follow:
1. receive the necessary information from the service provider to study such
information before deciding to use financial services;
2. choose and decide to use financial services;
3. receive information on its financial performance from the service provider;
4. its information is protected as confidential;
5. inquiries, comments and suggestions to service providers on financial service;
6. claim for compensate on damages arising out of breach of contract or defect in
the provision of financial services;
7. keep information about financial services consuming securely, such as
passbooks, card codes, financial contracts, deposit-withdrawal voucher;
8. provide relevant information completely and accurately and truly as requested
by the service provider;
9. implement the contract as signed with the service provider comply;
10.inform the service provider immediately on problem of financial services consuming such as: data, checks, card or ledger is lost or damaged; 11.report on violations of financial consumer protection regulations to the Financial Services Consumer supervisory and Inspection Agency or the relevant authority; 12.exercise rights and perform other obligations as stipulated in the laws and regulations.
Chapter 5
Prohibition
Article 22 Prohibition for service providers
Service provider is prohibited from the following behaviors:
1. Provide the services inconsistent with law and regulation;
2. Collect fees for receiving, researching and modifying user complaint;
3. Unauthorized disclosure of consumer's information;
4. Disclosure of information or advertisements of financial services is inconsistent
with reality;
5. Create products that are detrimental to good traditions or cause of danger to
society;
6. Restrict the consumer's right to receive information, propose, sue, protect
personal information or terminate the contract;
7. other behaviors abused law and regulation.

Article 23 Prohibition for the consumer
Consumer are prohibited from the following behaviors:
1. all kinds of defamatory publicity to service providers, and to financial service
consumer protectional supervisory and inspection authority;
2. provides inaccurate and false information to service providers;
3. use financial services for purposes of inconsistent with the law;
4. other behaviors abused law and regulation.
Article 24 Prohibitions for officers of the financial services consumer supervisory and
inspection authority
Officers of the financial services supervisory and inspection authority are prohibited from following behaviors:
1. Perform duties that are biased or illegal;
2. Accept bribes or solicit benefits related to the supervision and inspection on
the consumers protection of financial services;
3. Falsify or use false documents, disclose secrets, delay or destroy documents
relating to the consumer protection of financial services;
4. other behaviors abused law and regulation.
Chapter 6
Dispute settlement between the consumer and the service provider
Article 25 Dispute settlement approaches
Conflict between consumer and service provider may be settled as following approach:
1. compromise or mediation;
2. resolution by the Bank of the Lao PDR;
3. resolution by the Economic Dispute Resolution Organization;
4. complaints to the people's courts.
Article 26 Compromise or mediation
In the event of a dispute between the consumer and the service provider, the parties should try to resolve it through compromise or mediation. Compromise or mediation methods shall be complied with consumer protection law.
Article 27 Resolution by the Bank of the Lao PDR
In circumstance of compromise or mediation cannot be resolve by the both parties or consumer is not satisfied with the settlement stipulated in Article 14 of this Decree, the parties may propose to the Bank of the Lao PDR with relevant documents and evidence for resolution. The Bank of the Lao PDR may directly resolve disputes between consumers and service providers in case of wide-ranging affecting dispute. The Bank of the Lao PDR shall consider to resolve such disputes in accordance with the procedures and method for resolving administrative disputes determined in the Consumer Protection Law.
Article 28 Resolution by the Economic Dispute Resolution Organization

In the event of dispute between consumer and service provider, the parties have the right to claim to the Economic Dispute Resolution Organization to resolve it in accordance with the law.
Article 29 Sue to the people's court
In the event of dispute between the consumer and the service provider, the parties have the right to claim to the people's court for a decision in accordance with the law.
Chapter 7
Supervision and inspection on financial services consumer protection
Article 30 Financial Services Consumer Protection supervision and inspection Authority
The Bank of the Lao PDR is an authority that is directly responsible for and main liaises with the Ministries, equivalent agencies of state, local authorities and other relevant parties to supervise and implement the financial service consumer protection activity.
Article 31 Rights and duties of the Bank of the Lao PDR
On the supervision and inspection of financial service consumer protection, rights and duties of the Bank of the Lao PDR are as follow:
1. study and determine strategic plans and regulation on the financial service
consumer protection activity;
2. set and implement a plan for the financial service consumer protection as well
as disseminate to the public to know;
3. establish mechanisms and solutions method for consumer request;
4. collect data, monitor, supervise and evaluate the implementation of financial
services consumer protection;
5. require the service provider to report or provide information in the event of any
incident or situation related to the financial service consumer protection;
6. publish a report on the results of the financial service consumer protection;
7. provide financial literacy to the people in the society through appropriate forms
including information on financial services;
8. inspect the financial service consumer protection activity including the
activities of the unit or staff who are responsible for protecting the consumer of financial services of the provider;
9. declare the service provider to solve its service or incorrect behavior;
10.take measures against abuser in accordance with relevant law and regulation; 11.coordinate with relevant authorities on the financial service consumer protection activity; 12.summarize and report on financial service consumer protection to the government regularly; 13.Exercise other rights and duties based on the law.
Article 32 Inspection content
The contents of financial services consumer protection inspection are as follow:
1. Implementation of policies and regulation related to the financial services
consumer protection;
2. Financial services providing;
3. Other activity assigned by the government.
Article 33 Inspection approach

Three approaches of financial services consumer protection inspections are as follow:

1. Regular inspections which is operated base on regular and scheduled plan;
2. Pre-informed inspection, which is unplanned inspection when it is deemed
   necessary, which shall be notified to the inspected person;
3. urgent inspection, which inspect urgently without notifying the inspected
   person in advance.
4. Inspections of financial services consumer protection shall be carried out in
   strict accordance with the law.
   Chapter 8
   Reward Policy for good performer and measures against violator
   Article 34 Reward policy for good performers
   Individuals, legal entities or organizations having outstanding performance in implementing and participate in the financial services consumer protection will be awarded and other policies in accordance with the regulations.
   Article 35 Measures against Violators
   Violators of this decree or regulations relating to the financial services consumer protection users will be measured as warning, re-education, discipline, fine, civil compensation or criminal proceeding.
   Chapter 9
   Final provision
   Article 36 Implementation
   Assign to Bank of the Lao PDR to implement this decree.
   Consumer, service provider and other parties have to recognize and implement this decree strictly.
   Article 37 Effectiveness
   This decree is come to effectiveness since the signed day and after it has been disseminated on official gazette fifteen days. Any terms, provisions incompatible with this decree are hereby all repealed. The Government of the Lao PDR Prime Minister Thongloun Sisoulith

Translated by: Mr. Xayleuaxa Phouyyavong, Head of Law Department Mr. Thongchanh Souksakoun, Deputy Head of Law Dissemination Division