The Government has imposed more transparency on the commercialization of revolving credit cards to financial institutions to curb abuses, but nevertheless it chooses not to limit the maximum interest rate that they can offer to their clients.
Sources from the Ministry of Economic Affairs and Digital Transformation led by Nadia Calviño have finally ruled out this option, considering that it could exclude the group with less solvency from financing and, on the other hand, break commercial dynamics and competition from the market itself.
In addition, the limitation would have required a norm with the rank of Law and the same sources specify that it was "urgent" to act on this segment of credit given the sudden increase in consumer complaints at the Bank of Spain and in different courts.
For this reason, the General Treasury Secretariat headed by Carlos San Basilio has prioritized focusing on transparency in commercialization and reinforcing the solvency analysis of borrowers before signing a loan.
In this way, the ministerial order establishes requirements so that the advertising is clear and the client knows the risks in payment of very high interests that he assumes when contracting the product. In some cases these have reached over 30% and fed back the debt itself, which has resulted in Supreme Court rulings that have characterized them as "usury".
In addition, the new regulation obliges entities to reinforce the solvency analysis of their clients to avoid conflictive situations and guarantee their ability to repay the loan. For this, the ministerial order includes an illustrative financing model with a rate of 25% and a duration of four years in order to establish an approximate quota.
In the case designed by the Ministry of the Economy, it is a financing of 1,500 euros with an interest rate of 19%, which would imply the payment of a fee of 45 euros per month for four years. Upon maturity of the loan, the interest paid would amount to 609 euros and would add 25% of the initial capital plus the interest itself. If the installment were 30 euros a month - delaying the repayment of the credit - the interest payment would amount to 1,400 euros. "We want the client to really know the cost of the deferment and there is no incentive for them to pay small installments that end up turning into excessive debts," explain ministry sources.
In addition, the new ministerial order obliges financial entities -including banks, fast-financing companies or electronic money- to upload all the information of their clients to the Risk Information Center of the Bank of Spain (Cirbe) for amounts greater than 1,000 euros.
In this way, the current band of 9,000 euros is lowered and much more information will be generated in the system about the risk or delinquency profile of a potential client. The frequency with which entities are obliged to submit information is also reduced, which goes from 30 to 20 days.
Calviño's team is confident that the new regulation does not imply any credit restriction due to the greater demands placed on entities. Bankinter warned last Thursday that it had slowed down the marketing of this product in recent weeks while waiting for the regulatory uncertainty about the 'revolving' to be resolved. "It is a balanced regulation, which requires new conditions but in turn gives the financial company tools to carry out a more detailed analysis of its clients and improve its solvency analysis," they point out in Economy.
According to the criteria of The Trust ProjectKnow more
- Nadia Calviño
- living place
CrisisFinancial suffocation after confinement: 322,000 other households asked to defer loans in June
EconomyThe Greek 'popular' minister suspected of betraying Calviño denies it: "I voted for her until the end"
Restarting Spain will remain a country of owners, but less: rent takes off and young people back down
See links of interest
- Last News
- English translator
- Work calendar
- Daily horoscope
- Santander League Ranking
- League calendar
- TV Movies
- Cut notes 2019
- Live: Moto2 Andalusian GP
- Live: MotoGP Andalusian GP
- Juventus - Sampdoria