Regulation of Instant Loans and Other Credits in Swedish Law

Author:Annina H. Persson, Ann-Sofie Henrikson
Annina H. Persson Ann-So e Henrikson
Professor of Private Law Doctoral Candidate of Private Law
Department of Law, Department of Law,
Psychology and Social Studies, Umeå University
Örebro University
Regulation of Instant Loans and
Other Credits in Swedish Law
1. General overview
Until the 1980s, the Swedish credit market was strictly regulated. In the wake of the deregulatory reform
that took place in that decade, the range of consumer loans has since increased dramatically. Apart from
ordinary mortgage loans and loans for more expensive goods, there are sales of all other sorts of consumer
goods on credit, both in stores and via the Internet. Since 2006, there has also been a range of easy-access
non-secured consumer loans (hereinafter ‘instant loans’) – in other words, short-term loans for relatively
small sums that are to be repaid quickly. Characteristic of the instant loans is that they normally are also
linked to a high APR and a certain xed charge. In Swedish, the term ‘SMS loan’ is sometimes used, because
the application for credit can in some cases be made via a text message (SMS).
The creditors are credit institutions – i.e., banks and credit-market companies but also other nancial
institutions. Credit institutions are regulated in their business primarily by the Banking and Financing
Business Act (‘Lagen (2004:297) om bank- och nansieringsrörelse’). Both banks and nancing businesses
require a licence for their operations where the Swedish Financial Supervisory Authority (FSA) is the regu-
lator. A licence is also required for those nancial institutions that provide loans to consumers. A new law
has been introduced on certain undertakings that works with consumer credits, (‘Lagen (2014:275) om viss
verksamhet med konsumentkrediter’).*1
In recent years, Swedish households have increased their debt levels signi cantly.*2 Household debt
has grown from 90% of disposable income in the mid-1990s to 171.7% in 2013. Household debt is to a large
extent due to the increase in mortgage loans. About 70% of households own their home, which is probably
why 81% of household debt consists of mortgage loans.*3 Many people experience problems with repaying
their loans: 434,627 people had a debt that was registered with the Swedish Enforcement Agency in 2013, of
whom 62% were men and 38% were women. The total amount of debt that the Enforcement Agency has to
collect have increased, to about EUR 7.8 billion in 2013 from an annual level of about EUR 6.5–7 billion in
1 See FFFS 2014:8(Föreskrifter och allmänna råd om viss verksamhet med konsumentkrediter). (FSA, Regulations and guide-
lines on certain activities with consumer credits.)
2 See D. Finocchiaro et al. Hushållens skuldsättning, bostadspriserna och makroekonomin: en genomgång av litteraturen
in Riksbanken [‘Household debt, house price and macroeconomy: a review of the literature]. – Penning- och valutapolitik
[‘Monetary and exchange rate policy’] 2011/1, pp. 6–28.; Statens bostadskreditnämnd. Hushållens skuldsättning i spåren av
nanskrisen—en internationell jämförelse [‘Household debt in the wake of the nan cial crisis - an international comparison
]. Marknadsrapport (Market report), February 2011; M. Persson. Households indebtedness in Sweden and implications for
nancial stability – the use of household-level data. BIS Paper 46, May 2009.
3 Svenska bankföreningen (the Swedish Bankers’ Association). Bolånemarknaden i Sverige [‘The Mortgage Market in Sweden’].
2011, p. 6.

To continue reading