Many consumers buy on credit – furniture, electrical appliances or clothing. How difficult is it to get a loan for this? The financial regulator Bafin wanted to know.
The financial regulator Bafin sees some deficits in the granting of consumer loans. Some providers are apparently not particularly critical when granting loans, according to an article published on Wednesday in the “Bafin Journal”. In a sample taken in late summer 2023, almost 80 percent of the loan requests were approved by the tested banks or retail financing partners. However, half of the test buyers had a rather poor credit rating.
Specially trained testers, commissioned by Bafin, pretended to want to finance purchases of furniture, electrical appliances and clothing. A total of 48 test purchases were made at 4 online shops and 2 stationary retailers with their respective financing partners. In addition, two banks were contacted directly. During the so-called mystery shopping campaign, the testers took out financing or loans, which were subsequently revoked.
More than half of the testers did not feel well informed
Overall, more than half of the testers reported that they did not feel well informed about the financing they had requested. “In particular, they complained that consultants did not explain all the product features, did not address the personal situation briefly, seemed unsure and concluded consultations too quickly.”
The financial regulator expressly pointed out that the sample was relatively small and only represented a snapshot. As with any mystery shopping campaign, the results cannot simply be extrapolated to the entire German financial sector. However, the campaigns offer a direct look at market reality.
According to Bafin, in around a third of the test purchases the financial situation of the consumers was not recorded at all, while in other cases the process was often very superficial. Detailed information on income and expenses such as rent and living costs was only requested in half of the applications. In only 17 percent of the test purchases did the providers ask about existing loans.
Consumer advocates call for more protection against over-indebtedness
The Federal Association of Consumer Organizations (vzbv) is calling for people to be better protected from possible over-indebtedness during the loan granting process. “Loans can help consumers to realize projects such as buying a car or kitchen or to bridge financial bottlenecks. However, we observe that banks repeatedly grant loans that end in consumers being financially overwhelmed or over-indebted,” said Dorothea Mohn, financial market team leader at vzbv recently.
The financial regulator viewed it as positive that in most of the financing tests, the interest rate and term were agreed as promised in the advertising. Only in a few cases was it not clear that the advertised favorable terms were tied to conditions, such as a specific term.
Testers examine online advertising for investment funds
In another mystery shopping campaign, Bafin found that the financial institutions tested were mostly transparent and fair in their online advertising. From June to October 2023, testers examined the websites, apps and social media presence of ten banks and savings banks. The focus was on product advertising for regulated investment funds. The financial supervisory authority has carried out several mystery shopping campaigns on various financial topics since 2021.
Source: Stern
