These days, articles have been written that the government should launch a study on making proposals to get better “order” in the fast-loan market and reduce the excess debt
In a debate article from the express that you can read here, Monde Johanssen (S) and Minister of Justice and Per Bolund (MP), Minister of Finance and Consumer Affairs, write about this.
They write that individual individuals are responsible for the agreements they enter into and are allowed to take the consequences for their actions and that is something we also think is completely correct, however they write that the market is unregulated. Which is not true at all. As a company that deals with consumer lending, we are bound to follow the Consumer Credit Act and guidelines from the Consumer Agency. The Swedish Consumer Agency and the Swedish Financial Supervisory Authority are regulatory authorities in relation to our industry and shall ensure that we comply with all rules and regulations that exist. Of course, we follow their guidelines and all regulations that affect us. From the turn of the year, one must also have applied for or hold a permit from the Swedish Financial Supervisory Authority to conduct operations, of course we have submitted our application and are awaiting a decision from the Swedish Financial Supervisory Authority. They place high demands on you as a lender and are carefully regulated with prevailing stock and regulations for conducting consumer credit operations.
The MP and Deputy Chairman of the Civilian Committee Junard Lundstrand (S) will be commissioned to lead an investigation that will propose effective measures to make it a responsible market for consumer credit, a so-called sound credit.
They write that it should not be profitable to lend to a customer who is unable to repay the loan, and that fast loans should not be a gateway to over-indebtedness. This is so clear that we should not lend to anyone who is unable to repay the loan, and this is something that we work with a lot. Precisely when assessing whether a customer can repay his loan or not is not easy, even though a customer can look good on a credit report and on an analysis of the customer’s current income and expenses with the support of the Swedish Consumer Agency’s ability to assess the ability to pay. a customer may have trouble repaying the loan.
We also do not agree that our products are a gateway to over-indebtedness, we may in some cases be the one that pushes the customer over the edge, but then usually the customer already has other major credits from lenders who are considered “serious”.
In the article they write that they want the investigation to contain the following.
Interest and fees may not exceed the amount of the loan itself.
They mention that interest rates and fees can quickly be greater than the loan amount itself. This is not a problem at this time and has never been a problem for us who charge reasonable and statutory fees.
Interest rate ceiling
They want to limit the interest rate we can charge.
This is something that can have an impact on our product, it depends on where and how they set the limit. They have introduced this in Finland and where the classic fast loans have disappeared, but the companies behind them are left with a product that is adapted to the new level. If an interest rate ceiling is introduced in Sweden, we will see the same development as in Finland.
A civil penalty rule in the event of a credit check failure
This has already been put in place, the Consumer Agency can give a penalty if they think a lender has failed in their ability to determine a ability to pay. A lender must take a credit report and examine the debtor’s current ability to pay through a voucher (left to live on analysis) . We have taken a credit report since our start in 2007 and when the new Consumer Credit Act was introduced with the requirement to find out the debtor’s current financial position, we introduced it directly with us. SMS Money Norden AB is the only company that issues fast loans that have not received a warning from the Swedish Consumer Agency.
A written signature requirement
Sending a debt note to the customer for signing is nothing strange in itself, however, we do not think it is entirely timely when there are good opportunities to sign a contract remotely with, for example, bank ID or other approved electronic signing. It is also possible to undo its application with the right of withdrawal in accordance with the Consumer Credit Act and under the Distance and Home Sales Act. And they can also take this a step further that the signing has to take place, it causes a large group to be discriminated against as they may not be able to get to the nearest office to sign.
Stronger information and marketing requirements
No one informs the customer as much as we do about what our product costs and what the consequences will be in case of non-payment. For a layman to read only one interest rate and understand the cost of the credit can be difficult, therefore we are unclear about what it costs exactly on the krona to borrow from us. And this is something that many in our industry have taken up.
They also want a lender to be restrained in their marketing, this is something we are so clear about. We always try to make our marketing as informative and neutral as possible.
In general, we think that the points they want to investigate are sensible and can help small players and non-serious players disappear from the market. Since there was a requirement for permission from the Swedish Financial Supervisory Authority, these actors who are not considered serious have already closed their operations.
It will be exciting to see what they come up with and we hope that they also talk to those who are active in the industry to get as good an insight into our industry as possible. Who knows they may understand that there is not much difference in our lending and an established lender with higher capital amounts.