Faced with the proliferation of new online credit and payment solutions, France is keen to strengthen consumer protection. As part of the New Consumer Agenda, the European Commission will be working on revising the Consumer Credit Directive, which was already evaluated in November 2020.
Lack of pre-contractual information
The European Commission and national consumer protection authorities have published the results of an EU-wide survey of 118 websites offering consumer credit online.
The aim of the review was to check whether merchants were complying with EU consumer protection rules. It was found that 36% of the websites examined did not comply with EU consumer law. A number of essential pieces of information are missing from certain offers, such as the cost of credit, the interest rate or the existence of compulsory insurance.
Deceptive commercial practices
The European Commission is not alone in sounding the alarm. Indeed, UFC-Que Choisir has taken a close look at the boom in Internet mini-credits, instant loans for small sums over a short period of time, offered by banks or other financial companies. The association points out that there is no regulatory framework for these loans, which leaves the door open to abuses.
UFC-Que Choisir recently lodged a complaint against three organizations offering online mini-loans for "misleading commercial practices". These include interest rates of up to 2224%, unjustified fees and a lack of information for consumers. More specifically, the association is calling for these loans to be recognized as loans in their own right, and for their advertising to be regulated.
More precise monitoring of overindebtedness
France is in favor of strengthening the European directive on consumer credit. However, requirements must remain proportional to the amounts lent, so as not to prohibit access to credit for certain households. " We need to find an intermediate position so as not to dry up access to credit for certain households, without this leading to overindebtedness," explains LREM deputy Philippe Chassaing to Les Echos newspaper.
Overindebtedness is another topic monitored by the Banque de France. The institution recently published the first issue of its monthly Financial Inclusion Barometer, a document designed to identify monthly trends in individuals' need for financial information and support. According to the latest figures, overindebtedness is 20% below its 2019 level, and filings for redundancy-related overindebtedness are up slightly. Although new consumer credits do not appear in overindebtedness files, the Banque de France is cautious, as the amounts, still low compared with other credits, could increase.