Stricter requirements for SMS loans

Sweden's government has proposed placing tighter requirements on SMS-loan companies to carry out credit checks. However, proposals for interest rate caps or prohibitions on overnight loan payments have been rejected.

The number of unpaid bills for quick SMS loans has grown rapidly in recent years, and many young people have fallen deeper into debt. In legislative amendments adopted on Thursday, it was suggested that the same requirements for a credit check as apply to other loans should be applied to SMS loans.

In practice, the rules will force lenders to collect data on income and expenses both from the borrower and from an independent source like a credit information company. SMS loans are currently exempt from the requirements of the law governing credit reviews.

The government would also introduce a right of repayment, meaning that consumers can repay the loan within 14 days and avoid other costs besides the interest for the time he or she had the loan.

The Consumer Ombudsman has argued that the repayment period hardly helps the consumer because those who take out SMS loans usually spend the money as soon as they receive it.

In Finland, borrowers are prohibited from taking out their money before 7am if they applied for and are granted the funds between 11pm and 7am. The reason is that such applications are considered as being based on hasty decisions.

Sweden’s official debt collection agency, Kronofogden, believes that loans taken in the last hours of the day are usually used for games and purchases online. However, the government believes that a ban would place too many restrictions on the freedom to enter into contracts and points out that payments would still be delayed because of the new requirements on credit reviews.

The government has also rejected the idea of an interest rate cap as proposed by a commission at Uppsala University. Such a ceiling would lead to less competitive conditions. Instead, loan company marketing materials will be forced to clearly state current interest rates.

The amendments, which are based on an EU directive, will come into force on January 1st.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.


Governments including Sweden’s see support tumble for their handling of COVID-19, survey shows

Governments are fast losing support for their handling of the coronavirus outbreak from a public that widely believes death and infection figures to be higher than statistics show, a survey of six countries including Sweden revealed on Saturday.

Governments including Sweden's see support tumble for their handling of COVID-19, survey shows
Sweden's Prime Minister Stefan Lofven (L) speaks with Denmark's Prime Minister Mette Frederiksen during an EU summit in Brussels on July 20, 2020. AFP

Support for the federal government of the United States, the country with the most reported infections and deaths, dropped by four percentage points from mid-June, with 44 percent of respondents declaring themselves dissatisfied, said a report by the Kekst CNC communications consulting group.

In Britain, just over a third of respondents approved of their government's actions, a three-point decline in one month, according to the report, based on an opinion poll conducted over five days in mid-July. 

It also included France, Sweden, Japan and Germany.

“In most countries this month, support for national governments is falling,” the report said.

The notable exception was France, where approval rose by six percentage points, yielding a dissatisfaction rate of 41 percent.

France, which has the world's seventh-highest COVID-19 toll, has all but emerged from lockdown but has seen infections increase in recent days, prompting the government to order face masks in all enclosed public spaces.

In Sweden, which took a controversial soft approach to lockdown and has a higher toll than its neighbours, the prime minister's approval rating has shrunk from a positive seven percent to a neutral zero, the poll found.


People who participated in the survey —  1,000 per country polled — generally believed the coronavirus to be more widespread, and more deadly, than official figures show.

“Despite relatively low incidence rates compared to earlier in the pandemic in most countries (with the exception of the US), people significantly overestimate the spread and fatality rate of the disease,” Kekst CNC said.

In Sweden and Britain, the public believed that six or seven percent of people have died from the coronavirus, about 100 times the reported rate.

In the United States, respondents estimated that almost a tenth of the population had died of the virus, more than 200 times the real toll, while Germans thought their tally was 300 times higher than what has been reported.

Such views, said the report, “will be impacting consumer behaviour and wider attitudes — business leaders and governments will need to be conscious of this as they move to restart economies and transition into living with coronavirus for the medium to longer term.”

The poll also revealed that fear of a second outbreak wave is growing, and that an ever larger number of people believe the impacts will last for more than a year.

People “are becoming resigned to living with coronavirus for the forseeable future, and looking to leaders and business to pave the way forward,” the report said.

They are also increasingly likely to prioritise limiting the spread of the virus even if the economy suffers.

“In the US, 54 percent want the government to prioritise limiting the spread of the virus over protecting the economy,” it said.

The poll found that mask-wearing was generally popular, except in Sweden, where only about 15 percent of people sport a face-covering in public.

Even in the United States, where mask-wearing has become a politically polarising issue, 63 percent of respondents said they were in favour.