The internal and external rules that all fast money lenders must respect

Contrary to what many people think, the operations of fast money lenders do have to comply with a series of governmental and internal regulations. It is true that these private companies do not receive supervision from the Bank of Spain or the National Securities Market Commission (unlike conventional financial institutions), but that does not mean that their activity is not regulated. In this article, we review which laws have been enacted in this regard and how private lenders are self-regulating.

Laws that regulate the activity of urgent money lenders

There is no rule that specifically regulates the products known as mini fast loans, but there are two laws that all lenders that grant these loans must comply with:

  • Law 22/2007 on distance marketing of financial services for consumers: this standard establishes what information the applicant should receive fast money before and after requesting financing from a private company that operates through the Internet or other channels from distance.
  • Law 16/2011 on consumer credit agreements : this law regulates aspects such as the information that the borrower must provide to the applicant before and during the conclusion of the contract, the rights, and obligations of the lenders and the borrowers (including the right to withdrawal and early cancellation) or the method of calculating the annual equivalent rate (APR). However, credits whose amount is less than € 200 do not have to comply with this rule.

However, neither of these two laws establishes what maximum interest can be applied to bad credit loans, so the price of these products are fixed by the companies themselves according to the law of supply and demand. Currently, the average interest of these loans is around 1.1% daily.

Companies that grant quick money also follow internal regulations

In addition to meeting the standards mentioned above, many fast money lenders also follow a series of internal rules with the objective of promoting the responsible consumption of their products. In general, all of them undertake to study the applications correctly so as not to lend to clients who can not return their quick mini credits and not spread the data of the borrowers without their permission.

Many of these companies are also members of the Spanish Association of Microloans (AEMIP), a self-regulatory body that requires its members to comply with its Code of Good Practices. This code of ethics establishes what information should appear in the online portals of the lenders, in what aspects they should be fixed when evaluating the requests or what the procedure is, it is advisable to continue in case of non-payment.