Regulations on Pawn Loans

This regulation governs the Lombard loan in accordance with Articles 907 et seq. of the Swiss Civil Code.

B. Granting of Authorization

1 The operation of a pawn-broking institution is subject to authorization, which is granted by the Council of State if the following requirements are met

a) the persons entrusted with the administration and management of the institution have the exercise of civil rights, enjoy an excellent reputation, guarantee irreproachable activity, and are not in a state of insolvency evidenced by certificates of unpaid debt (attestati di carenza beni) or in a state of bankruptcy;

b) the institution has a minimum capital of CHF 1,000,000.-- fully paid-up, or a guarantee that allows it to benefit from financing of an equivalent amount; the two forms may be combined;

c) the institution has civil liability insurance, the amount of which must cover the value of the items deposited as pledge, with a minimum of CHF 1,000,000.--; the coverage must be adjusted annually to the values in deposit. [1]

2 A person shall not be considered to enjoy an excellent reputation or to guarantee irreproachable activity, in particular, if in the last ten years they have been convicted in Switzerland by judicial authorities of custodial sentences for intentional offenses contrary to professional dignity; for convictions incurred abroad, only those that would also be possible under Swiss law shall be considered.

3 The authorization is granted for a duration of five years and may be renewed upon request by the institution.

[1] Subpara. amended by R 20.2.2001, in force since 23.1.2001 - BU 2001, 50; previous amendment: BU 1994, 659.

1 The application for authorization to operate a pawnbrokerage institution shall be submitted to the Department of Institutions, Division of Justice (hereinafter Department), accompanied by the following documents

a) curriculum vitae of the persons responsible for the administration and management of the institution;

b) … [2]

c) criminal record extract;

d) attestation from the competent Debt Enforcement and Bankruptcy Office confirming that the interested persons are not in a state of insolvency evidenced by certificates of assets deficiency or in a state of bankruptcy;

e) attestation proving the full payment of the required minimum capital or the provision of equivalent security; [3]

f) attestation proving the existence of civil liability coverage; [4]

g) commercial register extract. [5]

2 The Department may request other documents it deems necessary.

[2] Letter abrogated by R 12.5.2009; in force since 15.5.2009 - BU 2009, 211.

[3] Letter amended by R 20.2.2001; in force since 23.2.2001 - BU 2001, 50.

[4] Letter amended by R 20.2.2001; in force since 23.2.2001 - BU 2001, 50.

[5] Letter introduced by R 20.2.2001; in force since 23.2.2001 - BU 2001, 50.

1 The issuance and renewal of the authorization are subject to a fee of CHF 500.-.

2 The operation of a pawnbroking institution is subject to an annual fee of CHF 300.-.

C. Conduct of Business

1 For every pawn loan, a written contract is required, a copy of which must be handed over to the debtor.

2 The contract, to which a copy of these regulations must be attached, must contain the following information

a) the progressive number of the contract;

b) the name (company name), registered office, and address of the pawn loan institution;

c) the personal details and address of the debtor;

d) the date of conclusion of the contract;

e) the net amount of the loan;

f) the annual interest rate and, if the contract duration is less than one year, the effective interest rate;

g) the annual amount of charges (administrative and custody) and, if the contract duration is less than one year, the effective amount thereof; [6]

h) the maturity date by which the loan must be repaid;

i) in the event of early repayment, the debtor's right to remission of interest and to an equitable reduction of charges corresponding to the unused duration of the loan;

l) the exact description of the object given in pawn; if the object is numbered, the identification number must also be stated.

3 The contract may have a maximum duration of twelve months; it is renewable in the manner and forms provided for in paragraphs 1 and 2.

[6] Letter amended by R 20.2.2001; in force since 23.2.2001 - BU 2001, 50.

The institution must keep a register in duplicate, to be stored in separate places, in which, for each contract, the information referred to in letters a), c), d), e), f), g), h) and l) of Article 5 must be recorded, as well as the date of delivery and withdrawal of the pledged item and, if applicable, of its sale.

Upon delivery of the pledged object, the institution is obliged to issue to the debtor a special policy (receipt) containing the following information

a) The name (company name), registered office, and address of the pawn lending institution;

b) An exact description of the pledged object, with mention, where applicable, of the identification number;

c) The progressive number of the contract;

d) The net amount of the loan;

e) The maturity date by which the loan must be repaid.

1 A maximum interest rate of 12% per annum (1% per month) may be applied to the mortgage.

2 For each contract, maximum annual fees of 2% of the net mortgage amount may be charged.

3 For each contract, maximum annual custody fees of 2.5% of the net mortgage amount may be charged. [7]

4 Any contractual clause providing for further remuneration for the institution is void. [8]

[7] Par. amended by R 20.2.2001; in force since 23.2.2001 - BU 2001, 50.

[8] Par. introduced by R 20.2.2001; in force since 23.2.2001 - BU 2001, 50.

The objects received as pledge must be deposited daily with a bank (safe deposit box or other); an institution possessing the necessary security measures may be authorized by the Department to keep the objects on its premises.

The debtor has the right to redeem the pledged object at any time, by reimbursing the loan and paying the interest and expenses calculated up to the end of the current month in which the redemption takes place.

1 If the pledged item is not redeemed within the agreed term, the institution shall notify the debtor, by publication in the Official Gazette and registered letter, to redeem it within a period of thirty days.

2 If the notice remains fruitless, the sale of the pledged item shall take place, without prior execution, under the responsibility of the Debt Enforcement and Bankruptcy Office of the place where the institution has its registered office, according to the procedures provided by the Federal Law on Debt Enforcement and Bankruptcy for the realization of movable assets; the institution has the right to charge interest on the principal, accruing from the maturity of the loan until the time of sale, at the rate established by the contract, as well as the costs of publication, realization, and safekeeping; the institution cannot assert a personal claim. [9]

3 The Department may delegate the organization of auctions to third parties, under its supervision; for this purpose, it shall issue the necessary provisions. [10]

4 The surplus from the sale belongs to the debtor, whose right expires in five years; after this term, the amount shall be devolved to the institution. [11]

[9] Par. amended by R 20.2.2001; in force since 23.2.2001 - BU 2001, 50.

[10] Par. amended by R 26.5.1998; in force since 29.5.1998 - BU 1998, 161.

[11] Par. amended by R 20.2.2001; in force since 23.2.2001 - BU 2001, 50; introduced by R 26.5.1998 - BU 1998, 161.

The institution is obliged to register in the commercial register and must keep its accounts in accordance with Articles 957 et seq. of the Code of Obligations.

[12] The pawnbroking business is incompatible with any other economic activity.

[12] Art. introduced by R 20.2.2001; in force since 23.2.2001 - BU 2001, 50.

1 The Institute's activities are subject to the supervision of the Department, which conducts regular inspections.

1. The Department punishes infringements of the Swiss Civil Code, the Federal Act on Consumer Credit, and the present regulation with the following disciplinary measures against persons entrusted with the administration and management of the institution

a) a warning;

b) a fine up to CHF 10,000. -- .

2. If the Department ascertains violations of the Swiss Civil Code, the Federal Act on Consumer Credit, and the present regulation, or becomes aware of other irregularities, it shall adopt the necessary measures to restore legal order and eliminate the irregularities.

III. Revocation of authorization

1 The Council of State revokes the operating license of an institution that no longer fulfills the conditions required for its issuance.

2 The revocation of the license may also be pronounced in case of repeated or serious violation by the institution of the obligations established by the Swiss Civil Code, the Federal Act on Consumer Credit, and these regulations.

3 In the event of operating a pawn loan institution without a license, the Department shall order all measures suitable for terminating the factual situation contrary to law, and specifically the cessation of activity by the institution; Article 56 of the Administrative Procedure Act of 24 September 2013 is applicable. [13]

E. Expiration of the license

[13] Para. amended by R 18.2.2014; in force since 1.3.2014 - BU 2014, 117.

1 The authorization expires

a) with its expiry, after a period of five years, subject to renewal;

b) with the death of the holder or the dissolution of the legal entity;

c) with the renunciation of the holder;

d) with its revocation.

2 In the event of the authorization expiring, the security deposit is released by applying by analogy Articles 7, 8 and 9 of the regulation of the law on the exercise of fiduciary professions; this procedure also applies, in case of replacement of the security deposit, for the release of the previous security deposit. [14]

[14] Para. amended by R 4.7.1995; in force since 7.7.1995 - BU 1995, 311.

The issuance, renewal, revocation, and expiry of the authorization are published in the Official Gazette; measures adopted pursuant to Art. 15 para. 3 may also be published.

[15] The provisions concerning minimum capital or guarantee do not apply, until the expiry of the authorization, to institutions that already hold authorization at the entry into force of the amendment of 20 February 2001.

H. Entry into force [16]

[15] Art. introduced by R 20.2.2001; in force since 23.2.2001 - BU 2001, 50.

[16] Marginal note amended by R 20.2.2001; in force since 23.2.2001 - BU 2001, 50.

This Regulation shall be published in the Official Bulletin of Laws and Executive Acts and shall enter into force immediately. [17]

Published in OB 1994, 259.

[17] Entry into force: 12 July 1994 - OB 1994, 259.