Regulatory risk

The operations of Bondora Group –mostly Bondora– are regulated by various consumer protection, financial services and other state authorities in various jurisdictions; the relevant laws and regulations include, but are not limited to, those that pertain to consumer loans and consumer rights protection, debt collection, and personal data processing. In addition, Bondora is required to obtain and renew various licenses, permits and authorizations in connection with its consumer lending operations. Such regulations are often complex and generally oriented towards protecting consumers; they impose significant compliance obligations and costs on consumer lenders that could adversely affect Bondora Group’s business and hinder its expansion plans. National and international regulatory authorities and plaintiff bars have subjected the consumer-lending industry to intense scrutiny in recent years. Any failure to comply with laws and regulations applicable to Bondora Group’s operations or to obtain permits and comply with authorizations required for its operations, or adverse findings associated with governmental inspections, may lead to the imposition of material fines or penalties, or more severe sanctions, including preventing Bondora Group from engaging in certain business activities or imposing criminal penalties on its officers.

Bondora Group is currently unaware of any investigations into material breaches of existing laws and regulations applicable to its operations that could lead to adverse actions, decisions, requirements or sanctions. Nevertheless, such issues could arise in future. Another regulatory consideration is that Bondora is required to have a license to conduct consumer lending services in several of the jurisdictions it operates in, and it is dependent on the relevant authorities to grant such licenses and, in some jurisdictions, to renew them. If Bondora Group fails to comply with laws and regulations applicable to its business, it may not be able to renew its consumer-lending license in one or more jurisdictions. Local regulators may also suspend existing licenses or revoke them permanently.

The regulatory environment in which Bondora Group conducts its business is extensive and complex. From time to time, Bondora Group has and may in future become aware of instances where its operations, products and services have not fully complied with requirements under applicable laws, regulations or contracts. Complying with applicable requirements can be highly technical and subject to varying interpretations. When Bondora Group becomes aware of such instances, whether as a result of an internal compliance review, regulator inquiry, customer complaint or otherwise, Bondora Group generally reviews the activity in question and determines how to address it, which may include modifying the product, making customer refunds or providing additional disclosure. Bondora Group also evaluates whether reports or other notices to regulators are required and acts accordingly.

Regulators reviewing such incidents may interpret laws and regulations differently than Bondora Group does, or they may choose to take regulatory action regardless of any corrective measures that have been taken. This may be the case even if Bondora Group no longer offers the product or service in question. All of the above may hinder Bondora Group’s ability to conduct or expand its operations; may force it to attempt to relocate existing operations; and more generally, may have a material adverse effect on Bondora Group’s business, financial condition, operational results or prospects, or cash flow.

Bondora is regulated by the Estonian Financial Supervision Authority (FSA) and was granted a Credit Provider license. The FSA is the main regulating body in Estonia which governs and oversees all banks, credit providers, credit intermediaries, insurance companies, insurance intermediaries, fund managers, investment and pension funds, investment firms, E-money institutions and payment service providers. The supervision authority helps to ensure that financial institutions are able to meet their obligations towards their customers and that the companies provide service that is of highest of standards. Bondora is also regulated in Finland as a consumer lender and works with leading law firms to address all regulatory issues. Additionally, Bondora is a member of several local organizations in an effort to be kept up-to-date on market developments and potential changes in the operating environment.

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