The Contract Committee of Thailand’s Consumer Protection Board has issued new requirements and prohibitions for consumer loan agreements. The Notification of the Contract Committee Re: Stipulation of Loan Business for Consumers as a Contract-Controlled Business B.E. 2565 (2022) was published in the Government Gazette on December 13, 2022, and will take effect after 90 days (i.e., on March 13, 2023).
The notification repeals and replaces the Contract Committee’s previous notifications regarding the same subject matter, which were issued in 2001 (Nos. 1–2), 2002 (No. 3), and 2015 (No. 4). The notification enhances protection for consumers by extending the scope of application and stringently regulating the content of agreements for loans to individual consumers.
The scope of the notification is largely indicated by its definitions of a few key terms:
Required Loan Agreement Content
The notification requires that the loan agreement be clearly legible in Thai language, and it must be executed in two copies for both the lender and the borrower. The font size must not be smaller than two millimeters, with no more than 11 characters within one inch. The details that must be stipulated in the agreement include:
If the loan agreement gives the lender the right to adjust the interest rate, the lender must notify all borrowers concerned in writing by registered post or email regarding any interest rate adjustment, depending on circumstances as stipulated in the Contract Committee’s notification.
Prohibited Loan Agreement Content
The Contract Committee’s notification prohibits the loan agreement from including certain clauses that provide excessive benefits to the lender, including:
Online, electronic, and digital loan businesses must also comply with this notification and ensure that the content of loan agreements complies with the specified requirements and prohibitions. Operators of platforms that act as an intermediary, such as peer-to-peer lending, must facilitate the distribution of loan agreements to the concerned parties (particularly the borrower).
The provisions under this notification do not apply to loan agreements executed before the new notification’s effective date (i.e., March 13, 2023), which would have to be in accordance with the Contract Committee’s previous notification on consumer loans.
As the new notification has an extensive scope of application and notable requirements and prohibitions, business operators—particularly nonfinancial institutions—should prepare for these more rigid provisions and review their draft loan agreements to ensure full compliance.
For more information or advice on the notification’s requirements, review of draft loan agreements, or any other aspect of consumer lending in Thailand, please contact Nutavit Sirikan at [email protected].