Banking and finance lawyers in Iceland

Banking and finance law covers the relationship between customers and financial institutions: loans and mortgages, consumer credit, guarantees, leasing and car financing, investment services and the regulation of banks, pension funds and other financial undertakings.

The legal framework

• Act on Financial Undertakings No. 161/2002: licensing and conduct of banks and other financial institutions.
• Consumer Credit Act No. 33/2013: information duties, cost disclosure and the right to repay consumer loans early.
• Act on Mortgage Loans to Consumers No. 118/2016: creditworthiness assessments and information before a mortgage is granted.
• Interest and Indexation Act No. 38/2001: interest and the rules on inflation-indexed loans.

Indexed and non-indexed loans

A particular feature of the Icelandic market is the inflation-indexed loan (verðtryggt lán), where the principal is adjusted to the consumer price index. Monthly payments can be lower at the start, but the balance can grow when inflation is high. Non-indexed loans usually have higher interest rates. Understanding this difference is essential before taking a mortgage. See also buying property in Iceland.

Supervision and complaints

Financial institutions are supervised by the Financial Supervisory Authority of the Central Bank of Iceland (Fjármálaeftirlit Seðlabanka Íslands). Consumers who disagree with a bank, lender or insurer can take the dispute to the Complaints Committee on Transactions with Financial Undertakings (Úrskurðarnefnd um viðskipti við fjármálafyrirtæki), a low-cost alternative to the courts.

When to contact a banking and finance lawyer

Get advice before you sign a large loan or a personal guarantee for someone else's debt, when a lender demands early repayment or enforces security, when you believe a loan was mis-sold or wrongly calculated, or when your company needs financing documents drafted. If you are already struggling to pay, see debt problems in Iceland.