A new Finance Watch study, published on Tuesday 9 February, sheds light on several predatory selling practices related to consumer credit in three European countries and points out the shortcomings of the 2008 consumer credit directive.
The study is based on data collected during the summer of 2020 by 89 anonymous clients in Spain, Ireland and Romania. According to the organisation, the results confirm that the current rules do not ensure that consumers can make an informed choice when taking out consumer credit.
The study also highlights poor assessments on creditworthiness, which can lead to the sale of predatory loans that consumers are unable to repay—potentially exacerbating the already alarming problem of non-performing loans (NPLs) in the EU (see EUROPE 12624/5).
In 31% of the cases studied, the lenders did not ask for the borrower’s budget balance nor income and expenses during the credit assessment process.
Furthermore, the study shows that there is a high degree of predatory advertising practices. As an example, Finance Watch cites the case of a credit provider in Romania who announced an interest rate for a personal loan starting at 8%, but did not inform the consumer of the maximum interest rate applied or the conditions to be met to take advantage of this offer.
See the report: https://bit.ly/2N9RxMW (Original version in French by Marion Fontana)