In a recent investigation by the Dutch Authority for the Financial Markets (AFM), Tinka, a reputed credit provider offering deferred payment options for online and in-store purchases, has been found to have breached legal standards for responsible credit provision on multiple fronts.
As a result, AFM has decided to impose an administrative fine of €1,750,000 on Tinka.
The AFM’s findings underscore the serious implications of overcrediting, potentially placing consumers in financial jeopardy.
The AFM has conducted market-wide research into responsible lending, in which ten files for each provider were examined risk-based.
At Tinka, ten files were also selected in this way, looking at the period from July to December 2021. The investigation showed that in 7 of the 10 files examined, Tinka did not obtain enough information about customers’ financial positions and provided irresponsible credit in 2 of the 10. These violations were largely attributable to Tinka’s policies and processes.
Jos Heuvelman, AFM director, says, “This is serious, because excessive lending can leave consumers with too little money to pay for their fixed living expenses.”
The obligation of credit providers to gather comprehensive information about customers’ financial situations before entering into agreements is a fundamental requirement.
If credit is deemed irresponsible, it should not be granted.
The AFM has specified this open standard in the “Loan Standards Methodology,” ensuring that it provides a level of protection against over-indebtedness comparable to industry Codes of Conduct.
Unfortunately, Tinka fell short of meeting these standards, says AFM.
The AFM urges all credit providers to comply with consumer protection laws to ensure a level playing field in the credit market.
Companies that do not follow responsible lending practices may gain an unfair advantage by serving a larger market, at the expense of fair competition.
In response to the recent findings, Tinka is taking corrective measures to prevent future violations. Additionally, the company is implementing broader changes to its organisational and cultural practices.
Furthermore, the company intends to compensate consumers who may have been granted excessive credit, acknowledging the need for accountability and restitution in light of the AFM’s investigation.
Tinka: Providing flexible payments
Based out of Zwolle, the Netherlands, Tinka is a consumer credit business focusing on providing customers with flexible payment solutions that simplify their financial experiences.
The Dutch company offers an array of financial products, such as pay later, installment plans, and prepaid cards, to cater to the diverse needs of its clients.
Currently, the company has formed partnerships with over 10,000 affiliated stores, including H&M, Jack & Jones, Rituals, Foot Locker, C&A, and Hema.