Consumer credit: France wants to toughen the European directive

In the current economic context, the proliferation of new credit solutions for small amounts is a growing concern. It will even be one of the key subjects of the revision of the European directive on consumer credit, which is due to open soon in Brussels. And according to our information, France defends a strengthening of it.

“France wants better pre-contractual information for consumers”, indicates a source close to the case. The requirements must, however, remain proportional to the amounts loaned so as not to “Kill the market” and prohibit access to credit for certain households.

This concerns mini-loans, split payment but also overdraft authorizations. “Consumers must be better informed about the cost of credit, and overdraft is one of them”, adds this source. At the same time, France wishes to be able to maintain its regulatory specificity concerning revolving credit, which is much more regulated than with our neighbors.

“Right balance”

LREM deputy Philippe Chassaing, to whom the government has entrusted a mission on over-indebtedness, must present a first assessment of his work next week. Its report should make it possible to support France’s position. “We must find an intermediate position so as not to dry up access to credit for certain households without this leading to over-indebtedness,” he explains. There needs to be a balance between verification and ease of payment. “

For the moment, these small credits escape the regulations surrounding consumer credit. In particular because they are less than 90 days and because the fees applied to them are marginal. But the proliferation of these offers, thanks to the pandemic and the development of e-commerce, has ended up attracting attention all over Europe.

It must be said that the valuation of companies offering this type of solution has exploded, like Klarna, Alma or Pledg. Just like the profits made by banking subsidiaries like Oney and Floa, market leaders in France.

Vigilance of the Banque de France

The Banque de France also wants to follow the subject of over-indebtedness, which is part of its missions, like fuel on the fire. “There are tools or practices that were not or little developed 15 years ago, we must be attentive to all market developments”, says a source within the regulator.

The Banque de France is publishing the first issue of its monthly Financial Inclusion Barometer this Thursday. A new tool which should allow more precise monitoring of over-indebtedness in this period of economic uncertainty and a faster response in the event of a slippage.

According to the figures of this first publication, the over-indebtedness is still 20% below its level of 2019. With a drop of 24%, due to confinements and exceptional aid, the year 2020 was too atypical to serve as a basis comparison. However, this first monthly follow-up makes it possible to identify a slight increase in the filing of over-indebtedness files due to dismissal.

For the moment, the new consumer loans do not appear in the over-indebtedness files of the Banque de France. But this is mainly due to the fact that the amounts are small compared to other credits, or to the fact that consumers themselves do not identify them as such, it is specified.

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