Published on 13 September 2018

On 11 September 2018 the Minister of Finance Mr. Hoekstra sent a letter to the House of Representatives (Tweede Kamer) in which he informed the House about the outcome of the research on the consumer credit market performed by the Authority for the Financial Markets (AFM), the Ministry of Social Affairs and Employment and the Ministry of Finance. The research was performed in response to the Actieplan Brede Schuldenaanpak, an action plan for tackling consumer debts, by the Ministry of Social Affairs and Employment.

In his letter, the Minister of Finance provides the following policy objectives in relation to the consumer credit market:

• In the environment of lending, the lender should not push the consumer in the direction of taking out a higher loan or a loan with a longer duration.
• Using loans for the purpose of consumer expenses is not the standard; lenders should not give the consumer the impression that it is.
• The lender creates an environment of lending in which the consumer realizes that it enters into a loan agreement that involves a repayment obligation and (interest) costs.

The Minister of Finance links several follow-up actions to these policy objectives. For example, he would like to find an alternative for the current warning “Let op, geld lenen kost geld”. He calls for market parties to use the upcoming renewal of different codes of conduct to put client centricity more centre stage. The Minister of Finance emphasises the high number of payment arrears with loans provided by mail-order firms (verzendhuiskredieten) (34%) and expects that providers of such loans will take additional steps to bring this number down.

In light of this letter of the Minister of Finance, concrete action points for lenders could be (among other things):

• To verify whether the way they present consumer loans is not contrary to the above policy objectives. The letter refers to practices that the Minister of Finance and the AFM find undesirable or unacceptable. For example, framing of a consumer credit as a normal payment method, without making clear to the consumer what obligations result from this.
• To the extent possible, to further tighten the credit check (kredietwaardigheidstoets), e.g. by asking the consumer about other outstanding small loans.
• To verify whether internal policies and practices with regard to dealing with payment arrears can be tightened.
• In case of revolving credit: to perform scenario analyses to see if and, if so, when a locked-up situation could occur, with the purpose to avoid such situations.

The letter of the Minister of Finance and the underlying report “Developments and risks on the consumer credit market” by the AFM (both in Dutch) can be found here.