‘Anti-Benefit Law’ limits what finance can charge; understand

The “anti-grant law” – a term created and quoted by the candidate Ciro Gomes (PDT) in this Tuesday’s Jornal Nacional (23) – has been in use in the United Kingdom since 2015. As the presidential candidate said, the citizen who pays the equivalent of twice his debt has its debt paid off.

However, the English measure does not apply to any debt and is quite specific: its target is high-cost short-term credit (HCSTC, or short-term, high-cost credit). In this type of loan, the client does not need to present collateral and takes money basically for day-to-day survival.

The average of these loans is £100 (R$ 605) – a value that dropped to £60 (363) after the implementation of the new measures in 2015. Previously, interest reached 4% per day, and the money could be paid in 30 days or 12 months.

The HCSTC is a loan not offered by English banks. Those who practice it are private finance companies. According to a study by the Financial Conduct Authority (FCA), which regulates financial laws in the country, 37 of these companies account for 99% of HCSTC loans.

In December 2013, Parliament asked the FCA to create a regulation to protect debtors from excessive interest. The agency then set three limits for the HCSTC: that the maximum interest per day be 0.8%; that fines for non-payment do not exceed £15; and, finally, that the total interest does not exceed 100% of the money borrowed.

It is in this last limit that Gomes’ team was inspired to create the “anti-nancy law”. “We are saying that if you paid twice what you took, the debt will be settled”, said the coordinator of the presidential program’s government, economist Nelson Marconi.

“Our idea for Brazil is to apply this limit to three types of debt: credit card, overdraft and personal credit. In installment plans, we are not moving because there would be confusion in commerce and we are afraid of harming the consumer,” he said.

According to Ciro Gomes, “Brazil has been charging the highest interest rates in the world for years. This explains why four Brazilian banks are among the most profitable in the world. twice the amount of a loan or debt that people have on their credit card or overdraft. That is, if you took R$100 and already paid R$200, the debt is automatically paid off.”

Marconi explains that, if implemented, the “antiquency law” would not be retroactive, that is, whoever is in debt, has already paid the debt three times and is still in debt, would not benefit. “However, that person will be able to take out a new loan [após a implantação das novas regras] and, with that money, pay the old one that has abusive interest”, he said.

The English rules were implemented in the UK on January 2, 2015, and extended in 2018. According to the FCA told the Sheetthe measures are valid and will remain so until the institution finds elements that justify a new review.

A 2017 FCA study found that 760,000 people take HCSTC every year in England. On average, each of these people applied for—and received—five loans. The average debtor is a 35-year-old male who receives a salary below the English annual average: £20,400 (R$123,000) against £26,400 (R$160,000).

Among those who asked for money, 76% had no savings, and among those who did, the average was £177. Their debts averaged £4,700. Their justifications for taking out an HCSTC loan were primarily to pay day-to-day living bills such as food and rent. Second, to settle debts contracted previously.

Implementing the rules in 2015, FCA Chief Executive Martin Wheatle said he was “confident that the measures would strike the right balance between credit providers and customers”.

“If the ceiling were a little lower, we would risk not having a viable market, and if it were a little higher, there would not be adequate protection for customers. For those struggling to repay loans, we believe the new rules will put an end to the spiral. debt”, he detailed.