While the European Commission at the moment unveils an motion plan that can permit banks to extra simply resell the 9 billion euros of “rotten” loans they’ve distributed, the UFC-Que Choisir is releasing a research1 which lifts the veil on the irresponsible distribution of shopper credit score, for shoppers in addition to for the financial system. Faced with the anticipated wave of delinquencies in 2021, the affiliation urges European lawmakers to safe debtors uncovered to difficulties. At the similar time, given the backlash from “push-to-crime” commercials from credit score establishments which appear decided to take benefit of the disaster, it calls on shoppers to be cautious and supplies them with sensible instruments to assist them. to claim their rights.
The financial disaster, the hotbed of irresponsible credit score
Despite an unprecedented decline in buying energy since 2013, a pointy rebound in consumption is predicted in December. In explicit, it’ll profit sectors which have been constrained by well being restrictions (automotive, furnishings, family home equipment, and many others.), and which trigger heavy expenditure for shoppers, in a context the place French purchases at Christmas may attain a peak ( 600 euros, + 10% in a single yr2).
Well conscious that budgetary difficulties don’t alleviate temptations, credit score establishments appear decided to take benefit of the disaster. Their floodgates are so vast open that the movement of shopper credit score broke an outdated document from the final disaster in 2012 (3 billion euros in the month of June alone). Worse, they compete with “push-to-crime” commercials. When Sofinco encourages individuals to take out loans that may be reimbursed after the holidays, its colleagues in lengthy-time period automobile rental (LLD), like Toyota Financement, are providing six-month hire deferrals!
Notorious pyromaniac lending establishments …
To these irresponsible practices, removed from an alleged “responsible credit”, is added a distribution that’s far too lax. Even earlier than the disaster, French banks have thus collected 9 billion euros in debt that their clients should not in a position to honor. Per borrowing family, these arrears exceed 1,000 euros, virtually ten occasions greater than in Germany.
Contrary to the acquired concept that the “bad payers” are victims of their very own excesses, these dangers are in actuality finished with the implicit endorsement of the lenders, as proven by the variations in the weight of the loans whose month-to-month funds should not not reimbursed in line with the banks. Thus, whereas on common 2.7% of French shopper loans are in default, that is the case for five.6% of Société Générale loans and even 7.1% in the BNP Paribas group! Conversely, Crédit mutuel or the BPCE group are lower than 2% in default. What offers rise to worry, in some lending establishments, a critical lack of vigilance in the situations of granting loans.
… and mediocre firefighters with defaulted credits
While 900,000 shoppers are getting ready to lose their jobs, shopper loans in default may, in line with our estimates, exceed 12 billion euros (+ 40%) in 20213. Under these situations, credit score establishments have a significant duty in the administration of these arrears, with a purpose to forestall debtors from falling into over-indebtedness. They should urgently provide them lasting options. In reality, two-thirds of the moratoriums granted in the spring expired in November.
In this regard, allow us to do not forget that lenders are approved to restructure defaulted loans (lengthening the time period, lowering the price, and many others.). It is subsequently deplorable to notice that these instruments, which may also help restore a sustainable price range and which may even be useful to banks, are far too little utilized in observe (30% of instances on common, and solely 18% at the Company. basic).
The European motion plan, the evil shouldn’t be handled at its root
If that weren’t sufficient, the European Commission is presenting at the moment an motion plan to purge the banks’ stability sheets of their “bad” credits. Far from looking for to treatment the too dangerous distribution practices in addition to the dangerous banking administration of the reimbursement difficulties of their clients, he intends to facilitate their resale to assortment firms!
While these gross sales may double to succeed in 7 billion euros subsequent yr, the native associations of the UFC-Que Choisir are already witnessing an explosion of complaints attributable to the lack of safeguards to the aggressive practices of the firms of restoration.
Mobilized alongside shoppers throughout the financial disaster, particularly to stop the dangers of budgetary collapses they incur attributable to the resurgence of irresponsible credit score, the UFC-Que Choisir:
- Calls for warning earlier than taking out shopper credit score;
- Provides an entire file of decryption actions to be taken when debtors are struggling to fulfill their reimbursement deadlines in addition to a standard mail permitting to use for a reorganization of credit score;
- Recalls that his network of local associations can accompany them.
At the similar time, confronted with the anticipated wave of difficulties in repaying shopper loans and given the risks posed by the European Commission’s motion plan, the affiliation calls on European legislators to power banks to suggest a restructuring measure. from the second reimbursement incident and, in any occasion, earlier than the doable task of a uncertain mortgage.
Finally, given the extent of the disputes already recorded inside its native associations, the UFC-Que Choisir pronounces that it’s going to make public the second half of its research in January, which is able to focus on the exhaustive evaluation of the deleterious actions of assortment firms. As of now, it’s offering shoppers with a decision tree as to the motion to be taken in the occasion of an try and recuperate a shopper credit score.
(1) Details, sources and methodology of the research in the presentation hooked up to the press launch.
(2) 4th version – Survey “Budget, financial strategies and tips of the French for Christmas”, Cofidis-Rakuten, 2020.
(3) This enhance would correspond to the “black” situation developed in 2018 by the European regulator, to evaluate the danger of a banking disaster. In view of the extent of the recession, inconceivable at the time, this estimate may even be fairly optimistic.