Finance – Consumer loans condemned by an NGO

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Posted inMarch 25, 2022, 00:16

NGO Finance Watch condemns “abusive practices” used to lure consumers into these loans.

The NGO also points to the lack of household credit checks before loans are granted. (explanatory picture)

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AFP

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Hidden costs, insufficient information or misleading advertisements… The NGO Finance Watch in Brussels on Friday denounced consumer credit “abusive practices” that it considers still widespread and called for stricter European regulations on the issue.

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“Misleading and predatory advertisements often give the impression that low-value loans such as payday loans and buy now with deferred payment plans are simple and risk-free. But in reality, they’re often extremely risky for the consumers who use them,” denounced Peter Norwood, head of research and advocacy at Finance Watch, in a press release.

solvency

Between December 2021 and February 2022, the association asked “mystery shoppers” to apply for loans in France, Italy, Denmark and the Czech Republic. Conclusion: The vast majority (95% of cases) of the 126 proposals examined did not show any visible information about the consequences in the event of default and late payment. Costs related to loans were also not mentioned in more than half of the cases.

The NGO also points to the lack of household credit checks before loans are granted. According to Finance Watch, in 68% of cases the company did not perform an “adequate” analysis of the household budget.

“Misleading Advertising”

The agency also reviewed deferred debit cards, a service most French banks offer that lets you pay for all your purchases on a specific date of the month. He believes the cards are “identified as an ordinary debit card, not a credit product” and that this would be “a kind of misleading advertisement”.

That is why the NGO calls for “putting the protection of the poorest citizens at the center of the consumer credit Directive”, which should be strengthened in the coming months. A revision was proposed by the European Commission in the summer of 2021, and the project has been discussed in Brussels ever since.

Finance Watch specifically recommends adopting compliant ceilings for the cost of loans or better moderation of advertising in this area. It also demands that all forms of consumer loans, in particular loans between individuals, be included in the directive.

(AFP)

Source From: Google News

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