The consumer credit segment is the most profitable for financial institutions, but it also entails a greater risk of insolvency, even more so in a context in which digitalization facilitates the granting of loans through formulas such as buy now, pay later (“ buy now, pay later”) and makes it possible for individuals to lend money to others through crowdlending platforms. In this context, and in order to protect the consumer, Spain has until November 2025 to adapt the consumer credit directive approved last October to its legal system.
The Government's plan is to launch in the coming weeks the public consultation on the text that will transpose the new European standard, which establishes the obligation to register and supervise lenders and credit intermediaries. A measure that they describe as “very positive” from the sector, since until now it was possible for consumers to receive financing from natural or legal persons “that are not regulated or supervised,” comments Ignacio Pla, general secretary of the National Association of Establishments. Credit Financiers (Asnef) and vice president of Eurofinas, the European Federation of Associations of Consumer Financing Entities.
The new regulations extend the scope of application to all consumer loans from 0 to 100,000 euros. However, each country in the Union may decide the upper limit and whether or not to include loans of less than 200 euros, without interest and without any other cost, whose repayment must be made in three months with minimal expenses, and tacit overdrafts. -when money is withdrawn from an account without sufficient balance-.
Another relevant novelty affects pre-contractual information, which must be presented in a clear, understandable way and adapted to digital channels. “The directive currently in force establishes such extensive pre-contractual information that it is practically equivalent to the same contract that you will sign later, so that many times over-information is misinformation,” says Pla. On the other hand, the new rule contemplates a mandatory first phase in which the client is provided with the most important data - such as interest rate, terms and amount to be financed - although the consumer will also be able to access complete information.
On the other hand, the directive urges member states to limit interest rates to avoid usury, which “will provide legal certainty for both the consumer and the industry,” says the general secretary of Asnef. This would put an end to the application of excessive annual equivalent rates (APR) that can reach 4,000%. However, each member state will decide the limit on the cost of credit, as well as the borrowing rates and APRs.
In this sense, the General Director of Supervision of the Bank of Spain, Mercedes Olano, recently opened the door to following the example of Portugal, a country that publishes on a quarterly basis the maximum APRs to be applied in the different consumer credit products to end legal uncertainty in this regard.
Asnef positively values the fact that the new directive demands greater training for credit distributors with the aim of improving consumer advice, although it is still unknown how this point will be implemented in the transposition into Spanish legislation. Likewise, the requirement for the obligation to evaluate the consumer's solvency to prevent over-indebtedness is reinforced, something that “regulated entities have already been doing,” says Pla.
Finally, advertising standards are tightened so as not to encourage consumers with a tendency toward excessive debt to apply for credit. And the ads must also contain a clear message about the cost of borrowing money for your own or family expenses.
For its part, the Association of Financial Users (Asufin) demands that the transposition of the directive into Spanish regulation also protects consumers and users from deferred debit cards - in which there is no need to have sufficient funds in the account. when the card payment expires - and peer to peer (P2P) loans, two products that the association considers that the directive leaves out.
