The Norwegian customers of unsecured loans are borrowing more and more money. According to the Norwegian government, this development is partly because of the aggressive marketing done by the financial institutions granting people unsecured loans, either in the form of personal bank-loans or through credit cards. Therefore, the Financial Minister Siv Jensen recently declared that new regulations of this market will be effective from the 1st of July 2017, in order to counter some of the tendencies in this branch which is seen as negative for the consumers who increasingly wind up with financial issues because of unsecured loans they are unable to handle. Meanwhile, these services are also important for the economical freedom of many Norwegians; and as such the regulations aim at providing some restrictions for the market, whilst also attempting to maintain the positive aspects that unsecured loans have for large numbers of customers.
In a press release dated 04.04.2017, the Norwegian Financial Department specifies the tendencies which are to be countered, and the laws and regulations that will be put to effect.
Regulations for the marketing of credit-services
The Financial Department has made a set of regulations for the marketing strategies of the personal loan industry. These pertain specifically to the way in which unsecured loans are advertised for, and contain such guidelines as:
- No emphasis on the simplicity of the application process
- No emphasis on how fast the borrowed money may be spended
- No emphasis on the fact that unsecured credit is generally easily available in a number of different ways
All these restrictions are, as one can see, designed to lessen the degree to which the financial institutions attempt to acquire more borrowers regardless of whether these people need the money or not. In that way, the regulations aim at having more customers who are in an actual need of borrowed money, and who are also able to handle them financially.
The new debt-register law
In addition to these regulations for the marketing strategies, a new law from the Financial Department will make a new register of personal debt more available to the financial institutions granting unsecured loans. Although this is already available in some respects, the new register will be more detailed and up-to-date (real-time); and the mandatory check-up of all applicants in this register is supposed to help the banks to provide loans more safely and to a higher degree only to people who can pay the loans and their interests back without troubles.
New regulations for the billing-process of unsecured loans
A separate regulation have also been made by the Financial Department for the way in which loan-customers are billed each month. From the 1st of July, every issuer of unsecured loans have to inform the customer of not just how much is to be paid this month, but also of how much money is owed in total to the bank. This is meant to give the borrowers a regular reminder of the amount of debt they have at all times, and thereby preventing people from applying for new loans when they already are seriously indebted and unlikely to successfully handle new loans.
In their entirety, the new set of laws and regulations from the Norwegian Government is expected to have an effect upon the total amount of unsecured loans being issued, but are mainly meant to prevent problematic borrowing habits for people unable to handle such loans.
Source: Scandilån Norway