Regulatory authorities have considerable discretion in carrying out their supervisory and enforcement activities, and the regulatory structure governing Bondora Group's operations is continuously evolving. Governments may seek to impose new laws, regulatory restrictions or licensing requirements that affect the products or services that Bondora Group offers, the terms on which it may offer them, and the disclosure, compliance and reporting obligations it must meet in regard to its operations.
New laws, regulatory restrictions or licensing requirements that specifically regulate the services provided by Bondora Capital may be put into effect, or authorities may interpret or enforce existing requirements in new ways, which could restrict Bondora Group's ability to continue to operate as it has done previously. Such measures could affect scoring model development, inhibit Bondora Group's ability to expand its operations, or impose significant additional compliance costs. In some cases, they could directly limit or prohibit some or all of Bondora Group's current business activities in certain jurisdictions, or render them unprofitable and/or impractical to continue. In addition, Bondora may be compelled to refund interest and lead to a determination that certain loans are not collectable, which could damage the brand and valued customer relationships.
Certain consumer advocacy groups and regulators have maintained that laws and regulations should be tightened to severely limit, if not eliminate, the type of loan products and services that Bondora Group offers. In Finland, for example, an interest-rate cap was introduced in 2013.
Governments of countries in which Bondora operates have debated, and may in future adopt, legislation that could, among other things, limit the interest or fees that Bondora can charge; cap the effective annual percentage rate, which would limit the amount of interest or fees that can be charged; ban or limit loan renewals or extensions, where a borrower agrees to pay the current finance charge on a loan in exchange for the right to repay the outstanding principal balance at a later date, plus an additional finance charge; limit the amount of interest or fees that can be charged for loan renewals or extensions; require Bondora to offer extended payment plans; permit only minimal origination fees on advances; require changes to underwriting or collections practices; require short-term lenders to be bonded; or require lenders to report consumer loan activity to databases that are designed to monitor or restrict consumer borrowing activity or that impose ‘cool down’ periods between the time when a loan is paid off and another is issued. Bondora Group may also become subject to laws and restrictions associated with performing automated clearinghouse functions or processing customer bank account direct debit transactions.
All of the above may hamper Bondora Group's ability to conduct and expand its operations, or force it to relocate existing operations, which may have a material adverse effect on its business, financial condition, operational results or prospects, or cash flow.
Bondora Group actively monitors relevant legislative and policy developments in Estonia, Finland, Spain and endeavors to ensure, to the best of its knowledge and abilities, that it remains compliant with laws and regulations of these countries.