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RESPONSIBLE CREDIT – The latest Dutch legislative efforts to improve domestic credit markets could be interesting for some of the other European countries to emulate
ECRC’s founding Dutch member Harro Norder from NVVK (Dutch council of municipal banks) shares with us the latest initiatives he and his bank have led in their efforts to make Dutch credit markets more socially responsible.


Over-indebtedness is strongly related to small loans with high interest rates. Financing cars, home video sets and so one are known by the easy way of getting a financial arrangement with a high interest rate. The Dutch government decided on instigation of the NVVK (Dutch council of municipal banks) that interest rates on commercial loans should be maximized at 15.9% on an annual basis. This implies that financing companies that are controlled by the ecd (economic control service) that do not comply could loose their financing license.


Easy lending is seen as one of the main issues for over-indebtedness. Buy now pay later is one of the key themes in recent financial marketing. That the real costs or the financial consequences are far greater or higher than customers actually expect is one of the reasons for the discussion about restrictive marketing. Comparing with “smoking is a bad habit” the NVVK (Dutch council of municipal banks) has made an arrangement with the Dutch government for restrictive financial advertisements. In essence it should be made clear in every advertisement what the total amount of repayment is during the time of the loan. Making clear what the total costs are, can be seen as one of the main reasons for not getting a loan for the less-necessary things. Prevention of over indebtedness is herewith a goal.


Low income and high loans is seen as a crucial aspect in over-indebtedness, and as such has implicated the decision for restrictive lending in the Netherlands. Commercial banks do not give out loans to people with an income at the social minimum. The social income (100%) is seen as necessary for living and should not be restricted by repayment of credit. Although it is just a gentlemen’s agreement, clients do have a very strong position for beholding their repayment schedule if banks did not take notice of it. There where a social credit is needed, the volkskredietbanken (NVVK, Dutch council of municipal banks) do have a structure in place for small social loans for clients with an income of up to 130% of the social minimum at low interest rates.


The Dutch BKR (bureau krediet registratie) is organized by several financial institutes which are currently members of this BKR. To get a good insight into the financial position of their clients, the Dutch BKR does register all financial contracts from € 250 and higher. In this way, over-indebtedness can be controlled by checking out the financial situation of potential clients. Not all the financial contracts (debts to the courts or to the government) are brought in this system. Together with the NVVK (Dutch council of municipal banks) a system has been worked out for an integrative approach of all the registered debts. A better prevention of over-indebtedness can thus be realized.


The importance of debt solving and responsible credit is being taken notice of by the Dutch government. The local municipalities get for a period of four years € 25 million, for working out prevention programs. The NVVK (Dutch council of municipal banks) has worked out the principles of this arrangement to enable having an effective application of their model of debt solving and prevention education.


On April 30th 2007 the NVVK (Dutch council of municipal banks) celebrates his 75 anniversary. November 8th 2007 is the date where attention will be brought on to this anniversary in the annual congress. More information will be put on the website nearer the time.


For more specific situations of over-indebtedness, the NVVK (Dutch council of municipal banks) has started operating with the SBN, the social banks of the Netherlands. The core objective is to prevent over-indebtedness and bring in a social awareness that easy lending is often the starting position of multi-problem situations. In their communication approach they have gone for “you better don’t lend”. Examples for calculating costs for lending should warn about getting a loan. But if and when a social loan is needed, the SBN can be contacted.

H.L. Norder MBA

ID: 39357
Author(s): NVVK
Publication date: 22/01/07

Created: 22/01/07. Last changed: 22/01/07.
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