THE ECONOMIC CRISIS, FOCUS OF IRRESPONSIBLE CREDIT
Despite an unprecedented decline in buying energy since 2013, a pointy rebound in consumption is anticipated in December. It will particularly profit sectors which have been constrained by well being restrictions (car, furnishings, family home equipment, and many others.), and which trigger heavy expenditure for shoppers, in a context the place French purchases at Christmas might attain a peak ( 600 euros, + 10% in a single 12 months2).
Well conscious that budgetary difficulties don’t alleviate temptations, credit score establishments appear decided to take benefit of the disaster. Their floodgates are so large open that the stream of shopper credit score broke an previous file 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 long-term automobile rental (LLD), like Toyota Financement, are providing six-month lease deferrals!
RENOWNED PYROMAN 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 prospects will not be in a position to honor. Per borrowing family, these arrears exceed 1,000 euros, nearly ten instances 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 completed with the implicit endorsement of the lenders, as proven by the variations in the weight of the loans whose month-to-month funds will not be not reimbursed in response to 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 provides rise to concern, in some lending establishments, a severe lack of vigilance in the situations of granting loans.
… AND POOR FIREFIGHTERS FOR DEFAULT CREDITS
While 900,000 shoppers are getting ready to lose their jobs, shopper loans in default might, in response to our estimates, exceed 12 billion euros (+ 40%) in 20213. Under these situations, credit score establishments have a significant accountability in the administration of these arrears, with a view to forestall debtors from falling into over-indebtedness. They should urgently supply 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, decreasing the fee, and many others.). It is subsequently deplorable to notice that these instruments, which may help restore a sustainable funds and which might even be useful to banks, are far too little utilized in follow (30% of circumstances on common, and solely 18% at the Company. normal).
THE EUROPEAN ACTION PLAN, EVIL IS NOT TAKEN AT ITS ROOTS
If that weren’t sufficient, the European Commission is presenting at present an motion plan to purge the banks’ stability sheets of their “bad” credits. Far from looking for to treatment too dangerous distribution practices in addition to poor banking administration of their prospects’ reimbursement difficulties, it intends to facilitate their resale to assortment firms!
While these gross sales might double to succeed in 7 billion euros subsequent 12 months, the native associations of the UFC-Que Choisir are already witnessing an explosion of complaints on account of the lack of safeguards to the aggressive practices of the firms of restoration.
Mobilized alongside shoppers throughout the financial disaster, particularly to forestall the dangers of budgetary collapses they incur on account of the resurgence of irresponsible credit score, the UFC-Que Choisir:
- Calls for warning earlier than taking out shopper credit score;
- Provides a whole 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 identical 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 attainable project of a uncertain mortgage.
Finally, given the extent of the disputes already recorded inside its native associations, the UFC-Que Choisir publicizes that it’ll make public the second half of its research in January, which can 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 to get better 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” state of affairs developed in 2018 by the European regulator, to evaluate the threat of a banking disaster. In view of the extent of the recession, inconceivable at the time, this estimate might even be fairly optimistic.
