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Parliamentary questions
PDF 101kWORD 18k
23 August 2018
E-004332-18
Question for written answer E-004332-18
to the Commission
Rule 130
Pirkko Ruohonen-Lerner (ECR)

 Subject:  Protecting consumers from payday loans
 Answer in writing 

Payday loans, i.e. unsecured personal loans and consumer credit, have become more and more popular in recent years. Some reasons for this are their aggressive digital marketing and the ease of receiving a loan. Payday loans may easily end up leading to a debt spiral, when expensive old debt is paid back by getting similar new loans. Directive 2008/48/EC on credit agreements for consumers adopted in 2008 has proven insufficient. Rather than protecting consumers from becoming over-indebted, it promotes offering credit to consumers.

To solve the payday loan problem, experts have proposed banning the aggressive marketing of credit agreements, a so-called positive credit register allowing creditors to see the applicants’ earlier loans, as well as interest rate caps and consumer education. Education will not necessarily be helpful to customers struggling with immediate monetary problems, as their income is typically low or their ability to pay may be otherwise compromised. The issue is further amplified by the fact that it is often difficult for the customers of payday loan companies to find one’s way around the true conditions and costs of the loans.

1. Payday loans have become increasingly popular, which has lead numerous consumers to become over-indebted. Has the Commission considered proposing restrictions to companies granting payday loans, such as interest rate caps that take the different costs and payments into account, a positive credit register, banning of aggressive marketing or even banning payday loans altogether?

2. Has the Commission considered introducing a customers’ right to cancel loan agreements, similar to the consumers’ right of cancelling orders and returning goods bought online?

Original language of question: FI 
Last updated: 3 September 2018Legal notice