mini-instant loans in the viewfinder of the regulator

In a press release, the ACPR called to order, without naming them by name, certain sellers of mini-instant loans. The regulator of the financial sector emphasizes in particular that the fees charged must comply with the regulations on usury.

According to the established expression, the policeman of the financial sector whistles the end of the CPR. In a press release published yesterday Thursday, March 31, the Authority for Prudential Control and Resolution (ACPR) reminds that only professionals with a license are authorized to market low-value loans. In the viewfinder, without naming them, the players in the small market for instant mini-loans, these loans of a few hundred euros, repayable very short term and presented as helping hand, salary advances or breakdown assistance. A product recently imported from Anglo-Saxon countries, which clearly targets the millions of French people ending up discovered every month.

Among the companies offering this type of product, there are specialized credit institutionssuch as Floa Bank, a subsidiary of BNP Paribas also working, under a white label, with the Lydia payment application, or Novum Bank, a Maltese bank which distributes its product in France under the Cashper brand. But also young specialized companieslike Finfrog or Bling. It is the latter that the ACPR seems to be targeting more particularly. Sherwood, the company behind Bling, does not benefit from any approval and is not listed in the Register of Financial Agents (Regafi). In the current state of things, it is not supposed to market credits, explains the regulator in substance.

Usurious practices?

The ACPR’s call to order does not stop there. In its press release, it also emphasizes that the costs of all kinds paid by the subscribers of these loans to obtain the sums promised under the conditions announced, including in an accelerated manner, must respect the limits set by the prohibition of usury. That is to say the maximum rates authorized by the regulations.

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The ACPR here targets the practices of almost all market players. With the exception of Finfrog, which is clearly seen as a good student, all charge, in addition to the cost of credit, the instant availability of funds, which is at the heart of their promise. Gold these express options are very expensivecompared to the amounts borrowed: 7euros, for example, at Bling, for a loan of 100euros; from 6.90 to 24.90 euros, depending on the amount borrowed, at Floa and Lydia; much more at Cashper, which takes 30% of the amount borrowed, or 30 euros, for example, for a loan of 100 euros. Costs deemed staggering 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% at Floa and Lydia to 2234% at Cashper, while the maximum authorized is currently 21.11% for this category of loans. A finding that led to the filing of a complaint for deceptive commercial practices against Bling, Cashper and Floa Bank.

To justify their practices, the actors explain that the cost of the instant transfer must not be included in the calculation of the APRsince this 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 concerned by this call to order and its impact on their business model.

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