Since 1 September 2023, stricter rules have applied to debt recovery, in order to protect consumers against unreasonably high interest rates and aggressive recovery practices. Companies with B2C activities therefore need to adapt their contractual conditions and recovery process to the new rules. We briefly list the changes.
The new rules are set out in a new Book XIX “Consumer debts” in the Code of Economic Law[1]. They apply to any delay in the payment of consumer debts to undertakings – including non-profit organisations.
The new rules therefore do not apply in a B2B context.
The contract terms of many companies contain a contractual penalty clause stating that in the event of late payment, the defaulter is automatically required to pay an additional amount. This usually takes the form of a percentage of the invoice amount, with a nominal amount as a minimum.
Under the new rules, this clause may only be applied after a notice of default has been sent in the form of a first payment reminder. The contractual penalty clause may only be applied if there is no response to this payment reminder within a period of at least fourteen calendar days.
If the reminder is sent by post, this period commences on the third working day after it has been posted. If it is sent by email, the period starts on the calendar day following the day on which the reminder was sent.
No costs may be charged to the consumer for this first reminder.
The first reminder must also contain at least the following information:
If a consumer so requests, the company must immediately provide him or her with all supporting documents relating to the debt and information on how to dispute the debt.
The new rules set limits on the compensation that companies can claim from a consumer.
The late-payment interest that can be claimed is limited to the reference interest rate from the Law of 2 August 2002 on combating late payment in commercial transactions, plus 8 percentage points.
In addition, the amount of the contractual penalty is limited depending on the amount outstanding. Its maximum level is:
Any contractual penalty that exceeds these amounts is prohibited and may not be applied.
If a consumer requests a payment plan, no further recovery actions may be initiated until a decision has been made by the company on that request. If no decision has been made within thirty calendar days after the first working day following the request, late-payment interest will be suspended until a decision has been made.
In addition to the fact that contractual penalties that do not comply with these rules cannot be applied to the consumer, certain violations also put the company at risk of being fined under the Code of Economic Law.
This ‘level 2’ sanction consists of a criminal fine of a minimum of €208 up to a maximum of €80,000 (including surcharge multipliers), or up to 4% of the total annual turnover in the last closed financial year prior to the imposition of the fine.
If your company deals with consumers, the message is that you should adjust your commercial toolbox (e.g. membership contracts, general terms and conditions) and your debtor management to the new rules. If you do not do so, your company may face (i) consumers who ignore your contractual penalties or (ii) criminal fines.
Our multidisciplinary teams are ready to help you adjust your general terms and conditions. Feel free to get in touch with your regular contact person at Grant Thornton or our legal team.
[1] Book XIX replaces the Law of 20 December 2002 regarding the amicable recovery of consumer debts.