The Dutch Authority for the Financial Markets (AFM) published an update on a court decision in its case against an online payday loan provider, in which the judge held that the “Regulation tackling flash credit” is not legally binding. As a result, providers of online flash credit established elsewhere in Europe are not required to comply with the Dutch maximum credit charge rate of 14%, and the AFM cannot compel them to do so. The AFM noted that, after years of domestic enforcement pressure, flash credit providers moved to other European Union member states to offer online loans into the Netherlands, prompting the Ministry of Finance to introduce the regulation to extend the 14% cap to EU-based providers. Separately, the AFM warned consumers that flash credit products are mini-loans with short repayment terms that can involve high costs, and advised borrowers to scrutinise provider terms and the consequences of non-compliance before taking out such loans. The AFM is assessing the implications of the new situation and potential follow-up steps and will consult with the Ministry of Finance.
Dutch Authority for the Financial Markets 2025-01-29
Dutch Authority for the Financial Markets hit by court ruling that EU-based online payday lenders are not bound by the Netherlands’ 14% credit charge cap
The Dutch Authority for the Financial Markets (AFM) announced a court ruling that the "Regulation tackling flash credit" is not legally binding, allowing EU-based online payday loan providers to bypass the Dutch 14% maximum credit charge rate. These providers relocated to other EU states due to domestic enforcement, prompting the Ministry of Finance's regulatory attempt. The AFM is evaluating the ruling's implications and will consult with the Ministry of Finance on potential actions.