Pawnbrokers

Business scope

Pawnbrokers established under Article 115 of Italian Royal Decree 773/1931 provide short-term financing to natural persons against pledged movable assets, based on an expert appraisal of their market value.

In accordance with Article 13 of Law 745/1938, the duration of a pawn loan may not be less than 3 months or more than 12 months.

Requirements

Pawnbrokers are financial intermediaries and, as such, must register under Article 106 of the Italian Consolidated Law on Banking (TUB). However, given the nature of their operations, supervisory provisions grant them some waivers from the general requirements for registered financial intermediaries (e.g. the minimum capital requirement).

Licensing requirements for pawnbrokers are as follows:

1. legal form of a joint-stock company (società per azioni), a limited joint-stock partnership (società in accomandita per azioni), a limited liability company (società a responsabilità limitata), or a cooperative company (società cooperativa);
2. registered office and headquarters in Italy;
3. paid-up initial capital of at least €600,000;
4. regulatory requirements for qualyfied shareholders;
5. statutory fit and proper requirements for members of the management body;
6. no close links between a financial intermediary, or any entities within its group, and other entities that could stand in the way of effective supervision;
7. business scope limited to pawn lending.

In addition, applicants are required to submit specific documents in compliance with Bank of Italy Circular 288/2015, including, among others, their memorandum and articles of association, a business plan with an analysis of the financial viability of start-up operations, and a report on their organizational structure.

The Bank of Italy shall reject applications where, based on the requirements assessment, the applicant cannot ensure sound and prudent management.

Post-licensing requirements

Newly-licensed pawnbrokers are required to send the Bank of Italy a certificate showing the date of business registration (for newly-incorporated entities) or of the amendments to the articles of association (for existing entities). As of that date, licensed intermediaries will be registered pursuant to Article 106 of the TUB and notified of their identification number.

Once registered, pawnbrokers are required to:

• join an Alternative Dispute Resolution (ADR) system, pursuant to Article 128-bis of the TUB;
• notify the Bank of Italy of the start date of their operations within 12 months of registration;
• notify the Bank of Italy of any changes to the information contained in the register, within 10 days of filing for registration of those changes in the business register. 

Intermediaries are supervised by the Bank of Italy in accordance with the organizational criteria published on our website and are subject to the supervisory powers set forth in statutory provisions.