The Government will limit by law that self-renewing credit clients increase their debt indefinitely

The Ministry of Economy is preparing a law to modify the Transparency and Protection of Banking Services Customer Order and strengthen the protection of users of indefinite-duration or automatically renewed credits. The objective is to prevent an excessive increase in the interest burden on the debt incurred by users of these financial loans, which are usually linked to deferred payment or “revolving” cards.

The new law will establish the new obligations of transparency and control, which include the obligation to report quarterly on the evolution and situation of specific aspects of the credit, such as the amount of the loan, estimated date of completion of the credit payment if there are no changes in the contract and various scenarios depending on the variation of the monthly payment. In addition, more detailed pre-contractual information will be required, which must reflect, among other things and in an illustrative manner, at least two payment options for the fees.

The user of the “revolving” credit will have the possibility “at any time” to request information about their loan, as well as about the amortization schedule or the amounts paid and pending, and must be informed before each extension of the unrequested credit limit. by the client, with the new installment and the accumulated debt. The aim is to put an end to the abuses detected by the excessive extension of credit and the increase in the final liability of the debt "beyond the reasonable expectations of the person who contracts this product", while at the same time a more prudent estimate of the payment capacity of the client, as reported by the Ministry of Economy in a statement.

In addition to improving the rights and information of those who request these loans, the order will also incorporate specific guidance aimed at financial entities that offer these products in relation to the solvency evaluation, so that they are obliged to make a more prudent estimate than Ensure the client's sufficient payment capacity and avoid over-indebtedness.

The final objective is to put a stop to the abuses detected by this type of financial products, which in many cases border on usury.

SOURCE: LARAZON.ES (READ THE NEWS ON ITS ORIGINAL SITE)