The general director of the Treasury and Financial Policy, Pablo de Ramón-Laca, argues that revolving credit is a modality that can be very useful and have a “very efficient” result if it occurs in conditions of transparency and competition, where it plays a role. key regulation. De Ramón-Laca has made these statements despite the fact that the Civil Chamber of the Supreme Court ruled that revolving card contracts that apply interest rates higher than the normal price of money and are manifestly disproportionate are usurious and must be canceled.
Revolving cards: interest with usury, infinite debts and customer persecution
This has been made clear during the meeting ‘The revolving credit in the Spanish legal system’ organized by ASNEF and the newspaper Expansión, in which it has valued that “the lives of many people have improved” thanks to access of this type financing, more flexible, although it has warned that it is not without danger.
“It can be dangerous if the consumer is not fully informed or does not have the necessary notions before signing the dynamics of his indebtedness or if it is granted irresponsibly. The regulation serves so that this modality, which is very useful, can be given in conditions of transparency and competition and the idea is that, if transparency and competition are maximized, the result is very efficient, “he explained.
In this sense, he stressed that the new regulations on revolving, which came into force in part last January, tries to guarantee that the consumer is perfectly informed at all times of the signing process to avoid over-indebtedness, while at the same time It facilitates the bank to carry out its solvency analysis through specific guidelines.
“We all know that the bank wants to do it in a responsible way, that the bank wants to serve customers to keep them and that, in the future, that customer wants to hire more services. So more information is given and the tools are improved to its willingness to do a better solvency analysis “, said the general director of the Treasury.
Regarding the fall in the granting of consumer loans since the beginning of the pandemic, De Ramón-Laca has ruled out that it is due to the new regulations. In his opinion, the response of consumers to stop consuming and save at a time as extraordinary as the current one “is entirely rational” and cannot be attributed to a change in the regulation of the contracting of certain products.
“The economy was put into an induced coma and the oxygen and the feeding of that induced coma was credit, but credit to companies. It is normal that household savings increase a lot because it increases uncertainty and the expectation of unemployment” , has pointed out.
Bank of Spain: there is room to improve regulation
The director of the Department of Conduct of Entities of the Bank of Spain, Fernando Tejada de la Fuente, also participated in the event, who explained that revolving cards have a higher cost because the flexibility with which the entity grants them entails some risks for it that it has to charge the client, as well as a higher regulatory cost that translates into higher interest rates.
In any case, he believes that there is still room to improve the regulation on transparency in the marketing of these cards and has proposed a regular review of the solvency of customers, the issuance of cards in payment at the end of the month or postponed. by default or advance in that the minimum fixed installments guarantee the sustainability of the payments, because sometimes “they do not even cover the amortization of the period.”
The representative of the Bank of Spain has insisted on the importance of financial education to avoid problems with complex financial products and has appealed to the awareness of citizens, emphasizing their part of responsibility when taking a loan.
“We talk a lot about the responsibility of the bank when giving credit, but we must also talk about responsibility in taking credit, citizens cannot be victims of self-fraud,” he warned.
In this sense, Tejada de la Fuente has ensured that there are clients who deceive credit institutions regarding their income or give incomplete partial information that prevents them from correctly performing the user’s solvency evaluation exercise.
“On the path of financial education there is much to be done so that citizens are aware of the importance that they themselves have to be responsible for providing information when they have to sign credit contracts,” he said.