On 3 July 2023, the report on enhanced consumer protection against risky lending and over-indebtedness (SOU 2023:38) was submitted to the Government. The overall purpose of the report was to present proposals for changes to the law in order to help reduce the risk of consumers being offered and granted loans that they do not have the financial means to repay and to propose a system for a debt register.
Proposals regarding consumer protection include clarification of the requirement for moderation in the marketing of loans by means of an explicit statement in the Consumer Credit Act that marketing must not be insistent or encourage the consumer to make rash decisions. There is also a proposal for a requirement that marketing of loans must always include a specific statement that taking out a loan involves costs, as well as a reference to where the consumer can obtain support with matters concerning budgeting and debt. There is also a proposal for stricter requirements for lenders to always carry out a credit assessment and check information against an external database, as well as certain restrictions on the pricing of loans in the form of a lower interest rate ceiling and a new absolute cost ceiling.
Changes to legislation other than the Consumer Credit Act are also proposed, including a requirement that entities licensed in accordance with the Certain Consumer Credit-related Operations Act must design their remuneration systems in a sound manner in order to counteract commission-based remuneration calculated on the basis of loans granted, as well as stricter regulation of the credit prohibition in the Gambling Act.
The overindebtedness report also proposes the introduction of a new register of debt and credit information (the “Skri register”). According to the proposal, all loans subject to the provisions of the Consumer Credit Act must be reported to the register by the lender. Information on late payment must also be reported, along with information on the loans themselves (i.e. nominal amount, lender, due date, interest rate information).
In its consultation response, the Swedish Financial Supervisory Authority adopts an extremely favourable view of the proposals in the report regarding both the wider consumer protection rules and the introduction of the Skri register. The Supervisory Authority would like to go further in some respects, e.g. consumers would be given the option to block themselves from the possibility of being granted loans.
Lindahl is following developments with great interest. You are welcome to contact any of us if you have any questions regarding what the proposals mean for your business.