The Swedish Court Rules in Favor of the SFSA
In 2020 the Swedish Financial Supervisory Authority launched an investigation into Resurs Bank’s credit assessments. The investigation covered consumer loans granted during the period June-September 2019, focusing on 113 loans with amounts ranging from 80,000 to 400,000 SEK. The Swedish Financial Supervisory Authority concluded that Resurs Bank’s credit assessments lacked adequate information about borrowers’ income, existing debts, housing expenses, and other financial obligations. Consequently, The Swedish Financial Supervisory Authority issued Resurs Bank a remark and an administrative fine of 50 million SEK.
Resurs Bank subsequently lodged an appeal of the Swedish Financial Supervisory Authority’s decision to the Administrative Court, arguing that the Swedish Financial Supervisory Authority’s interpretation of “sufficient information” in connection with credit assessments under the Consumer Credit Directive[1] was flawed.
After the Administrative Court ruled in favor of Resurs Bank, the Swedish Financial Supervisory Authority appealed the decision to the Administrative Court of Appeal. The Swedish Financial Supervisory Authority emphasized the necessity of ensuring that consumers can meet their credit obligations, contending that Resurs Bank had not adequately verified the financial status of borrowers.
The Administrative Court of Appeal has now reversed Administrative Court’s ‘s ruling, affirming the Swedish Financial Supervisory Authority’s original decision and the 50 million SEK fine. The court agrees with the Swedish Financial Supervisory Authority that Resurs Bank’s credit assessments did not meet the regulatory requirements for sufficient information and highlights the importance of consumer protection. The Administrative Court of Appeal’s view is that the interpretation of “sufficient information” for credit assessments should be based on the circumstances of each individual case and that while specific evidence requirements may vary, it is important to comprehensively evaluate each borrowers’ repayment capabilities.
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[1] Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC