Swedish Parliament approves new legislation for consumer credit providers

On Wednesday 21 May, the Swedish Parliament approved a legislative proposal to further regulate Swedish consumer credit providers (including intermediaries). The proposal – which has been criticised by market actors– repeals the Certain Consumer Credit-related Operations Act (2014:275) (Sw. lag om viss verksamhet med konsumentkrediter), which has previously been the regulatory regime for consumer credit institutions.

To provide consumer credits going forwards and unless an exemption applies, a credit institution license under the Banking and Financing Business Act (2004:297) (Sw. lag om bank- och finansieringsrörelse) will be required. As such, consumer credit providers will be required to comply with e.g. capital requirements, strict risk management requirements and added reporting requirements.

The legislation enters into force on 1 July, and includes a grandfathering period for existing authorised consumer credit institutions, for whom the Certain Consumer Credit-Related Operations Act will still apply until the end of July 2026 and will continue to apply for the duration of the licensing process for consumer credit providers which apply a banking of financing business license by July 2026.