In a report published in July, the Prudential Control and Resolution Authority (ACPR) warns against split payments and mini-credits, accused of not requiring enough guarantees from borrowers. The financial services policeman invites market players to review their practices.
Split payment, or payment in installments, is popular, as are short-term credits, also called mini-credits. This is what the Prudential Control and Resolution Authority reveals in a study publish in July.
Of the 11 players questioned, the ACPR notes that between 2019 and 2020, the number of contracts increased by 21% for split payments and 43% for short-term loans. Thus, in 2020, the outstanding split payments granted by the 11 institutions amounted to 4.8 billion euros, for 18 million loans taken out by 10.5 million borrowers. Regarding mini-loans, it was 123 million euros for 224,000 files and 102,000 customers. On average, the amount of a split payment is therefore 350 euros, and 600 euros for a mini-credit.
Risk of poorly controlled debt
If the split payment can sometimes be the responsibility of the seller who offers this option to the buyer, and therefore free for the latter, the supervisory authority notes that 63% of split payments and almost all mini-credits included fees sole responsibility of the consumer.
But the real problem is elsewhere. For the ACPR, one thing is certain: sellers often grant it without checking the ability of borrowers to bear future chances. Thus, the acceptance rates over the period concerned were 73% for split payments, and 64% for short-term loans.
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However, in a period of high inflation, during which the rise in prices can lead the most fragile consumers to seek solutions, these products can be the source of poorly controlled household debt because they are not not regulated by consumer credit regulations.
The ACPR therefore invites the market to adopt measures to strengthen consumer protection, in particular by consulting the personal loan repayment incident file (FICP) to increased control the solvency of the applicant, in order to avoid putting a little more debt on a borrower who is already in difficulty.
Waiting to go further? A few months ago, the European Commission called for new regulations to change the previous directive, dating from 2008. The goal: to integrate these mini-credits and payment without fees into the scope of the future credit directive. consumption, explains the ACPR in its report.
Mini credit, LLD, payment in installments: the hidden face of a controversial business