This is not really particularly strange since the Law Society is critical of the new proposed law for fast loans, sms loans and other high-cost credits. Or rather, the Law Society is critical of how the investigation has been conducted and questions whether there really is a need for new regulations.
On the other hand, there are no fundamental objections to the purpose of the investigation, to reduce the debt among Swedes, but they do not believe that new regulations are the way to go. However, the media has thus chosen not to convey the news that the self-advocacy community criticizes the investigation that will strangle the fast loans, which is one of the media’s major scapegoats when it comes to debt in Sweden, despite the fact that it was worse before the quick loans were launched in Sweden (see below). Per cent of Swedes’ debts are liabilities to the state .
The law community is thus strongly critical of the State’s investigation, which will strengthen consumer protection against fast loans and other high-cost credits. Here’s what it says at the beginning of the Law Society’s opinion :
The Law Society rejects the proposal. According to the Law Society, the investigation has not shown that there is a need for regulation or that the proposed regulation is suitable to achieve the desired improvement for particularly vulnerable consumers. The Law Society further believes that the investigation’s reasoning is to a large extent based on a faulty interpretation of both national Swedish law and Union law. In principle, however, the law firm is in favor of one of the basic ideas of the investigation, namely to rectify maladministration by affecting financial incentives rather than by blunt prohibitions.
Even if you are not very knowledgeable in the Swedish bureaucracy, it is difficult to misinterpret the Law Society’s message.
- The state investigation has not shown that there really is a need for any new regulation.
- The investigation has not shown that the proposed laws improve the situation for particularly vulnerable consumers.
- The investigation has misinterpreted both Swedish law and EU law.
- You do not get rid of the abuses by introducing blunt prohibitions, it is not the right way to go.
The law risks deteriorating consumer protection
The Law Society points to several problems with the Consumer Credit Investigation in its opinion and believes that there are better ways to deal with the problems. They believe that it is better to let the Swedish Consumer Agency work closely with the representatives of the fast-lending industry and come up with a common policy, for example for how to make their credit assessments, than to selectively introduce new rules for certain players.
The Law Society believes that an attack on only the fast-lending industry is distorting competition and that other players who exhibit more harmful behavior are given more space. Yes, society points out that the Swedish Consumer Agency has focused too much on players in the fast-loan industry who do not behave blameworthy, while at the same time more harmful actors may act freely. Thus, it is better to increase regulatory oversight, which follows the current rules, instead of introducing new rules that the Law Society considers to be purely symbolic acts that can even lead to even worse protection for the Consumer. The reason why the situation can worsen is partly due to the fact that weak-handed players outside the fast-loan industry can gain a larger market share and partly that more and more people will take illegal loans, which is not good for the Consumer at all.
In short, it can be said that the Law Society believes that the need for loans will not go away just because the fast-loan industry is throttled, but people will only turn elsewhere and can then be hit even harder. Thus, there is an imminent risk that the new laws (if they are introduced) will not at all have the positive effect that the investigative team hopes for.
Difference in ability to pay and willingness to pay
In addition to this, society emphasizes that it is very important to distinguish between the ability to pay and the willingness to pay. It does not have to be at all that a fast loan company has failed just because several of their borrowers’ debts have ended up at Kronofogden. It may well be that many of their borrowers simply do not pay back what they have borrowed, even though they have actually been able to repay the loans. The investigation team also believes that this can be so, but without taking any greater account of it.
The Law Society believes that the investigation has defective facts. For example, it is difficult to know whether the new rules will have a positive effect on the Swedes’ over-indebtedness, since “the presence of persons at the Crown Prosecution Service is a doubtful indicator of how extensive the problem of over-indebtedness would be”, which the Advocate Society thinks the Investigation has overlooked on.