The Council on Legislation rejects a proposal to repeal LVK insofar as it relates to credit intermediaries

The Council on Legislation partly rejects the government’s proposal to repeal lagen (2014:275) om viss verksamhet med konsumentkrediter (“LVK”) [the Act on certain consumer credit-related operations] to instead impose a licence requirement under lagen (2004:297) om bank- och finansieringsrörelse (“LBF”) [the Banking and Financing Business Act] for activities involving the granting of consumer credit. It is noted that the proposal constitutes a restriction of the constitutional freedom of trade. Such restrictions must always be appropriate in order to ensure the achievement of the objective pursued and may not go beyond what is necessary for achieving that objective.

The rejection relates to the effects of the proposal on credit intermediaries. The Council on Legislation considers that the government’s justifications are deficient in that the proposal aims to reduce over-indebtedness. However, credit intermediaries do not engage in activities involving granting of credit, which is why giving such reasons for restricting intermediaries’ activities appears misdirected. It is therefore considered that the measures are too far-reaching.

The problems that the government thinks it has highlighted with credit intermediaries relate more to marketing of credits and, as the Council on Legislation states, it would be more appropriate to deal with them in marketing rules. The government’s reasoning on risks of circumvention is also rejected by the Council on Legislation since there is no clear statement on how such circumvention could be carried out.

Nor does the government refer to the suitability and proportionality of the proposal in relation to the restriction of intermediaries’ freedom of trade that the proposal actually entails. The Council on Legislation proposes that such aspects of the proposal be subject to further analysis. This should be carried out within the context of the preparation of the transposition of the new Consumer Credit Directive.