Adapting to the current Spanish market, so that it grows, is one of the objectives that the FinTech sector requests for the new Consumer Credit Directive so that it is an agile transposition. It also proposes some of the urgent measures to be adopted to improve the Online Lending sector, that go through the adherence to the CIRBE (Risk Information Center of the Bank of Spain) of the entities dedicated to online credit.
Other measures are creation of a office single positive compulsory credit for any financial institution, not to use the APR as a reference to compare the cost of credit in entities not supervised by the Bank of Spain due to the existing differences with the products of the supervised ones, as well as the suppression for the calculation of the APR of costs other than the financial cost of the loan.
These measures are included in the first White Paper on Lending Online in Spain, prepared by the Spanish Association of Fintech and Insurtech (AEFI), which has had the collaboration of CMS Albiñana & Suárez de Lezo, the sponsorship of Equifax, Metlife, Electronic Identification, Creditea as well as the support of Bip Consulting and Political Intelligence, together with the members of the AEFI belonging to the Alternative Financing vertical.
In the document, AEFI limits the online credit sector to the loan of monetary amounts smaller and shorter deadlines than traditional credit institutions, so its accessibility is greater and faster, and the customer uses it to cover specific unforeseen needs or to access premium products without having to give up or limit their monthly spending levels. A sector that is becoming increasingly important, consolidating itself as a source of alternative financing and one of the verticals with the greatest economic weight in the Spanish FinTech sector.
For Patricia SuarezPresident of ASUFIN in charge of the opening of the event and prologue of the White Paper “This AEFI document is useful to get closer to a sector that contributes to the financing of products and services while serving as a practical guide. That is why we positively value the will of the AEFI to maintain a constructive debate with consumers in the common search for excellence in the provision of products and services to financial consumers”.
Harmonized and adapted regulation
The alternative financing has been evolving towards new business models thanks to the use of technology in the processes of marketing and sale, which has translated into growth in the sector. However, there are still significant barriers to the evolution of business models, which is why the AEFI includes a series of important improvement measures, with the aim of adapting the current regulatory framework to the needs of consumers and the market.
Among the measures proposed are:
- Advance in the harmonization and homogenization of the market and of the legislation in the EU, eliminating barriers that suppose a limitation to the freedom of the market.
- The inclusion of a typification of online consumer credit products in the LCCC (Law of Consumer Credit Contracts).
- Incorporate online consumer credit institutions in the scope of application of Circular 1/2010, so that they can report on the average rates applied to their products, different from those offered by credit institutions.
- Promote the obligation to consult the EFFECTIVE file (Exclusions for Addictive Behaviors and Games of Chance) before granting any credit.
For its part, Jorge Bardonvice president of the AEFI shares that “Alternative financing companies form an indispensable sector for many people in our society who decide to look for different and more agile formulas to finance their needs. This sector is a necessary alternative to the granting of traditional credit and with an increasingly relevant weight, but it faces barriers that, from the AEFI, we try to overcome through the proposal of a series of measures that the financial industry hand in hand with regulators, it must execute in order to maintain the necessary competitiveness to boost the economy and favor financial inclusion”.
Challenges and opportunities of Lending Online
From AEFI they consider that the main challenges facing the sector are the protection of consumers and the harmonization of consumer credit in the common market. Both challenges were considered in the evaluation carried out according to the European Commission’s regulatory adequacy and effectiveness program (REFIT), as objectives of the 2008 Directive on consumer credit contracts, to guarantee high levels of protection. of consumers, as well as fostering the development of an internal credit market, which is highly fragmented throughout the EU.
In the words of Jaime Bofill, partner of CMS Albiñana & Suárez de Lezo “This White Paper comes at a very important moment, when the EU is working on the Consumer Credit Directive, which will generate a before and after in this industry. A sector that has brought about a technological revolution in the world of credit by facilitating access to alternative financing”.
Rodrigo García de la Cruz, president of the AEFI, points out that “We have prepared this book with the aim of analyzing the current panorama of alternative financing in Spain and its evolution, the regulatory framework and the regulations that these companies must comply with, as well as the future opportunities and trends that will come to the sector. There is no doubt that Lending Online has brought about a technological revolution in the world of credit by facilitating access to alternative financing”.
