The consultation document by the Ministry of Justice working group regarding ways to solve problems in the provision of quick credit hits the mark when it comes to quick credit, but offers little in terms of credit markets on the whole. Fortunately the working group on consumer credit, which was appointed in October, is expected to suggest ways to promote responsible lending.
The Ministry of Justice working group has prepared a consultation document on its work to provide remedies for problems and flaws in the provision of quick credit. As a result, Chapter 7 of the Consumer Protection Act would be amended to require that the actual annual interest be specified when marketing small and short-term credit. The amended chapter would also include a provision on the creditor's obligation to reliably verify the identity of the credit applicant as well as a provision to ban the practice of having credit applied for at night at the consumer's immediate disposal.
Minor amendments are also proposed to the Penal Code and the Debt Collection Act. A significant change that would have a practical effect on debtors' position is the working group's proposal to amend the Interest Act in such a way as to impose a time limit on the creditor's right to charge interest higher than the statutory penalty interest.
Requiring more responsibility would also reduce costs to society
The working group does not suggest ways to reduce the costs to society from quick credit. Quick credits amounting to just a few hundred euros in any given instance create a tremendous burden on the authorities (local welfare, social crediting, social assistance, debt counselling, arrangement of debts, processes related to the courts, etc.). Businesses tend to push the responsibility for such problems on the consumer and the costs of the side effects are borne by society. Quick loans have become an expensive product for society. For this reason alone, actual ways to promote more responsible lending are desperately needed and the expectations have now turned toward the consumer credit working group.
We could ask whether there is a need to accelerate or feed the credit markets endlessly. The primary focus should not be on the ready availability of credit, but rather on measures to prevent losses and grievances.