instant mini-loans in the regulator’s sights

In a press release, the ACPR calls some sellers of instant mini-loans to order, without naming them. The financial sector regulator emphasizes in particular that the fees charged must comply with usury law.

According to the established expression, the financial sector policeman whistles the end of the CPR. In a statement released yesterday, Thursday 31 March, the Authority for Prudential Control and Resolution (Acpr) reminds us that only licensed professionals are authorized to market low-value loans. The players in the small market of instant mini-loans are targeted, without naming them, these loans of a few hundred euros, repayable in the very short term and presented as help, wage advances or roadside assistance. A product recently imported from Anglo-Saxon countries, which clearly targets the millions of French people who are discovered every month.

Among the companies that offer this type of product, there are specialized credit institutions, such as Floa Bank, a branch of BNP Paribas that also works, in white label, with the payment application Lydia, or Novum Bank, a Maltese bank that distributes its product in France under the Cashper brand. But also young specialized companies, like Finfrog or Bling. It is the latter that the ACPR seems to be targeting more specifically. Sherwood, the company behind Bling, has no approval and is not registered in the Register of Financial Agents (Regafi). As things currently stand, he shouldn’t be marketing credits, essentially explains the regulator.

Bling suspends his business

Following the warning from the ACPR, Bling announced on April 14, 2022 on its website to “temporarily stop” its business at the request of the regulator: “(…) we are currently in discussion to find, together , a solution that meets their expectations and yours “, explains the service to its users.

Usurious practices?

The call to order of the ACPR does not stop there. In its press release it is also underlined that the costs of all kinds paid by the underwriters of these loans to obtain the promised sums under the announced conditions, even in an accelerated way, must comply with the limits set by the prohibition on usury. That is to say the maximum rates authorized by the legislation.

save up to 70% on your borrower insurance

The ACPR here targets the practices of almost all market players. With the exception of Finfrog, who is clearly seen as a good student, everyone charges, in addition to the cost of credit, the immediate availability of funds, which is at the heart of their promise. Gold these express options are very expensive, in relation to the amounts borrowed: 7 euros, for example, at Bling, for a loan of 100 euros; from 6.90 to 24.90 euros, depending on the amount borrowed, from Floa and Lydia; much more from Cashper, who takes 30% of the borrowed amount, or 30 euros, for example, for a loan of 100 euros. Costs deemed astounding by the consumer association UFC-Que Choisir, which calculated in April 2021 that the annual percentage rate (APR) of these instant loans ranged from 91% for Floa and Lydia to 2234% for Cashper, while the maximum authorized is currently 21.11% for this loan category. A finding that led to a complaint for misleading commercial practices against Bling, Cashper and Floa Bank.

To justify their practices, the actors explain it the cost of the instant bank transfer must not be included in the calculation of the APRsince it is an option, the borrower’s hand. This is clearly not the opinion of the ACPR. It will now be interesting to observe the reaction of the companies affected by this invitation to order and its impact on their business model.

Leave a Comment