Vietnam: Finance companies are prohibited from demanding debt or reminding the relatives of customers from January 01, 2020

Specifically, according to Clause 7 Article 1 of Circular No. 18/2019/TT-NHNN of the State Bank of Vietnam amending and supplementing Point dd Clause 2 Article 7 of Circular No. 43/2016/TT-NHNN, one of the contents that must be addressed in the internal rules on consumer lending of finance companies from January 01, 2020 is as follows:

- Actions to be taken to push customers into repaying and collect debts which are relevant to specific customers, conform to laws and exclude any threat to customers. The maximum rate of sending debt repayment reminders shall be 05 a day; the method and time frame of reminding debt repayment which are agreed upon in consumer lending contracts, especially such time frame that must be between 7) and 21 o’clock (Compared to Circular No. 43/2016/TT-NHNN, Circular No. 18/2019/TT-NHNN has limited the maximum number of debt reminders in one day to 5 times);

- A ban on sending debt repayment reminders, debt repayment requests and information about debt collection to organizations or individuals that are not liable to pay debts to finance companies, unless otherwise required by competent regulatory authorities regulated by law (This is a completely new content supplemented in Circular No. 18/2019/TT-NHNN);

- Customer information confidentiality prescribed by law (This is also a completely new content supplemented in Circular No. 18/2019/TT-NHNN).

Thus, from January 01, 2020 (the date Circular No. 18/2019/TT-NHNN takes effect), finance companies are only allowed to make a maximum of 5 phone calls or text reminders to customers per day, and they are also prohibited from threatening customers in any form. Starting from January 01, 2020, finance companies are strictly prohibited from making phone calls or sending text reminders, debt demands, or debt recovery information to organizations or individuals who are not obligated to repay the debt, such as workplaces, friends, relatives of the customers, except when requested by authorized state agencies.

The supplementation of regulations to Circular No. 18/2019/TT-NHNN is completely appropriate and necessary. Currently, there are many cases where finance companies, due to being unable to contact customers or when customers refuse to fulfill payment obligations, immediately contact and disturb the relatives, friends, and colleagues of the customers, even resorting to threats, causing a lot of inconvenience and negative impacts on these individuals, even though they have no obligation to repay the debt.

By incorporating these regulations into a specific legal document, finance companies will have a clear understanding of their debt collection practices and be able to comply with the law, thus limiting unnecessary inconveniences for unrelated individuals.

Nguyen Trinh

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