Strengthened consumer protection in the credit market

Björn Wiechel (S)

Mr. Speaker! The Social Democrats see a great need to strengthen consumers' rights and protection in the credit market through regulation, which is what this debate is about.

An unhealthy market has created a situation that, in large parts, creates havoc. There are many examples of people who, pressured by unserious actors, get trapped in vicious debt cycles. We cannot have that. The previous, S-led government took several and important steps in the area to eliminate usury and regulate the market, and it is welcome that the current government continues the work.

The problems with unserious quick loan companies and an unhealthy credit market need to be addressed. That those who lend money in the future shall be regulated and live up to requirements as a bank, as is proposed, is reasonable. The Social Democrats therefore support the bill. But the bill simultaneously contains certain question marks, Mr. Speaker.

The Government has not provided a sufficient basis for how it justifies that credit intermediaries should also be covered by the legislation. These deficiencies in the proposal have been raised by both referral bodies and the Council on Legislation, and the Government's response is that it makes the assessment that lenders and credit intermediaries are so intertwined that an exemption for credit intermediaries could result in the law being bypassed by quick loan companies.

It is difficult to review and evaluate that assessment or make a different assessment based on the government's deficient underlying data. The Social Democrats therefore assume that the government has sufficient answers as needed to justify the position and that it is working to ensure that consumers continue to have the opportunity to compare borrowing costs.

Furthermore, criticism has been voiced that the government is handling the bill separately from an EU directive that is about to be implemented. That directive also concerns regulations and reinforcements of consumer rights, and it states, among other things, that credit intermediaries shall have the right to operate in a European market. Since the EU directive and the current bill have points of contact, we Social Democrats expect the government to have a well-thought-out and coherent policy where the two products are compatible.

Mr. Speaker! Strengthening the position of consumers is of very great importance. In light of that, and of the fact that the government itself says it protects consumer protection and rights, it is both regrettable and contradictory that the SD-government simultaneously holds back the introduction of a debt and credit register. Such a register is, in fact, important in this context.

So it is completely perverse that the SD government chooses to completely scrap the support for Sweden's consumers, i.e., those in civil society who help and support consumers in the market. That is, of course, part of the SD government's right-wing populist culture war against the people's movements, the folk education, and the associations of Sweden. This is about pocket change for the state, but it is devastating for Sweden's consumers.

The consequence of the SD government's contradictory actions in parallel with the current proposition is confusion, which contributes to clouding the motives behind the government's proposal in a proposition that otherwise has good parts.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Martin Ådahl (C)

Mr. Speaker! To simplify something, which one perhaps should do in a debate like this, there are two major problems for private customers on the Swedish credit market. The first problem, which we are talking about to a large extent today, is over-indebtedness.

Swedish households are at the bottom, that is, are among the most indebted, in the world. This is the case for far too many households. We have an acute situation where actually 400,000 people today have debts with the Enforcement Authority. Perhaps some of them are watching this broadcast from the Riksdag today. There are many families with children who are drawn into debt spirals, unfortunately often encouraged by the rather ruthless consumer credit companies that exploit their vulnerability.

What is good about what we are discussing today is that we are starting to take further steps to address this. It requires a concerted effort, and more regulations are actually needed. Pleasantly enough, practically all parties here in the chamber agree on that.

The bill that is before the Riksdag strengthens the rules, and from the Center Party's side, we think it is both reasonable and necessary. We would perhaps wish that one could go a little further. It is important to facilitate the credit registers that are used to ensure that persons and households in the risk zone do not fall into serious debt traps, Mr. Speaker. It is probably also important that we look further into the interest and cost cap that was introduced in March and see if it is sufficient.

Then we have the second problem, namely the lack of competition. It is a few banks in Sweden that dominate not only the mortgage market but also other important segments. They have stubbornly high interest margins, and it is quite difficult for competitors to break in. The Center Party has for a long time, in general, advocated that competition should be strengthened and thus the consumers' position.

Among other things, it should naturally be made easier to change banks, and in that regard, we have looked at the interest rate differential compensation. Things are happening now, but it may also not be enough. Even when it comes to this, the credit register can contribute to healthy competition. As mentioned by the previous speaker, it is a rather unhealthy market today.

Actually, we would have wanted to support this bill, but the problem is that at one point it goes in the exact opposite direction. The bill goes against the consumers' interest to be able to compare loans and choose the best terms. The proposal means that the one who compares the loan brokers for the consumers, which is not always so easy, shall be forced to become a bank themselves. It shall not only compare loans, but it shall also compete with those it compares.

It sounds quite unreasonable, and it is actually more than that – it is almost anti-competitive. Imagine that you go on Prisjakt or Pricerunner and choose the cheapest electronics. Then Pricerunner or Prisjakt themselves would have to compete with Webbhallen, Elgiganten, or whoever else is out there on the internet. They would have to sell the same products themselves; otherwise, they are not allowed to compare. It is as if Hemnet were forced to start brokering and selling homes.

That is not how it is supposed to be – one should not compete with those one is comparing themselves to. That is partly why the Council on Legislation is critical of this bill. That is why the EU Commission, in its regulation, goes in a completely different direction. Nevertheless, one takes this step away from healthy competition and restricts competition at the consumer's expense.

One is actually doing it completely unnecessarily. What motivates this is that one perceives that the loan brokers behave almost as if they were banks themselves. They have a very aggressive marketing. Then it is this – the aggressive marketing, which is directed at vulnerable consumers – that one should regulate if one sees it. It applies in the broadest sense; it does not help to become a bank. We who have at some point entered an internet site where windows pop up, or whatever it is, well know that a rather aggressive marketing is also carried out by banks that are regulated as just banks. Then this is not effective or purposeful for what one wants to achieve. I will therefore vote in favor of the Center Party's reservation 2.

Do it over and do it right! It is very good and necessary to regulate, especially in these times when the government's policy – this must still be mentioned here – unfortunately has contributed to a record-high unemployment and to a larger number of bankruptcies than in a very long time. The recovery has completely fizzled out. The economic policy does not respond at all to the tariff chaos and the crisis that prevails right now, but instead loads the companies with more costs instead of lowering them and thus creates a great deal of anxiety in the Swedish economy. Consequently, we also get many vulnerable households.

In this situation, it is important to regulate unserious actors and unhealthy competition. Then one must stand fully on the consumers' side. Do it over and do it right! Stand on the side of the vulnerable, not on the side of the big banks!

The speech at riksdagen.se, in Swedish (opens in a new tab)

Ida Drougge (M)

Mr. Speaker! At the Enforcement Authority, household debts have almost doubled over the last ten years. It is obvious that previous governments have not done enough to combat the over-indebtedness we see today.

Consumer credits have increased. Loans are granted without collateral. They can be called unsecured loans or payday loans; this type of loan has many names. Many are also those who end up in very serious problems after having taken out credits that they actually should never have been granted. It is the case that the rules state that a person who cannot pay their credits should also never be granted them. You must have the ability to pay to receive a credit. However, it is no secret that this is not working today. In practice, there are very many people who do not have the ability to pay who nevertheless receive credits.

If you become indebted for life with loans that you will probably never be able to pay back, it is obviously terribly stressful mentally. It does not only affect you but also your relatives, your children and your partner. It also means that no matter how many extra work shifts you take and no matter if you study extra in the evening to be able to get a new job with a slightly higher salary, you will not have more left in your wallet. All your money beyond the subsistence minimum will, regardless of work shifts and salary, go towards paying back loans that you might never get rid of anyway.

Therefore, this government is clear: the predatory lending on the most vulnerable people must cease. Significantly higher requirements are needed. That is why we are moving forward with these proposals. Yes, this will mean a significant change – that is the point. Quick loan companies will no longer be able to conduct business in the same way as today. One could, in fact, have introduced requirements corresponding to those that apply to banks for loan brokers and lenders in the legislation that exists now, but then it is perhaps more straightforward and clear to set the same requirements. That is what the government is doing.

Only for banks will it be permitted to mediate loans to consumers. If one wants to continue issuing consumer loans, quick loans, or unsecured loans, one must fulfill all the clear and extensive requirements that are currently imposed on banks. We consider this a reasonable step to protect consumers against unprofessional arrangements and loans that they actually cannot afford.

In addition to this reform, the government has also previously introduced several other powerful measures. A package that entered into force on March 1 this year meant that we significantly lowered the interest rate cap, from 40 percent plus reference rate to 20 percent plus reference rate. It also meant an expanded cost cap, so that virtually all types of consumer credits are covered.

It should not be possible to deceive consumers with false marketing by using high fees instead of interest rates or with lures that the consumer gets a lower interest rate but an extended binding period, so that the consumer will repay the loan over a much longer period and ultimately pay much more money for the loan.

The Swedish Enforcement Authority has also, in the regulatory letter for 2024, been tasked with initiating a series of preventive measures towards extra vulnerable groups and to increase the possibilities for persons who are denied an application for debt restructuring to still receive help to rectify their financial situation.

In addition to this, the government has recently given a new mandate to investigate a series of additional measures. They are to review absolute prescription periods, which means an outer time limit for you as a consumer for when you are no longer obliged to pay off your debt. A changed settlement order means that you shall first pay off your loan and then pay the interest.

The government will not let these questions go. This is a beginning. I mean that it is clearer to do it in this way and place these requirements on the lender who wants to give consumers the right and opportunity to take out loans for makeup, handbags, games, or something else. Whatever it may be, it needs to be done on the same basis as banks.

I vote in favor of the committee's proposal.

The deliberation was hereby concluded.

(Decisions were made under § 11.)

The speech at riksdagen.se, in Swedish (opens in a new tab)