Høringssvar fra American Express
PUBLIC CONSULTATION RESPONSE. UTKAST TIL FORSKRIFT TIL GJELDSINFORMASJONSLOVEN
Public consultation response – utkast til forskrift til gjeldsinformasjonsloven
American Express welcomes the opportunity to respond to the public consultation regarding "Utkast til forskrift om virksomhet etter gjeldsinformasjonsloven".
The new act on debt registries (nw. gjeldsinformasjonsloven) is an important tool in preventing debt problems among consumers and will contribute to enhancing the reliability of credit assessments. While we support the act in general, certain minor adjustments are necessary in order to increase the accuracy and reliability of the debt registries.
We set out below our views on one specific issue – the question of how the administrative regulation is to be interpreted in relation to consumer charge cards (nw. faktureringskort) with no pre-determined spending limit. In order for the debt registries to accurately reflect consumer debt levels, we believe this is an important issue to resolve. We will first give a brief description of American Express' charge card product, and then argue for clarity in how the administrative regulation is to be applied to charge cards and similar products with no pre-determined spending limits. We believe charge cards should be exempted from the requirement to report information to the debt registries.
2 American express charge cards
American Express offers a wide range of payment card products, including charge cards (nw. faktureringskort). Charge cards are not credit cards, but offers the cardholder an alternative way of payment by card. In other European countries, the charge cards are known under the name "deferred debit cards". American Express' charge cards have no pre-defined spending limit.
Upon payment with a charge card, an internal credit assessment is run based on American Express' internal risk models. As there is no pre-determined spending limit, each transaction is approved or denied individually depending on the credit assessment. Upon approval of the transaction, the merchant is paid in full by American Express.
The cardholder receives an invoice from American Express every month indicating the total amount charged to the card. The cardholder is required to pay the full amount charged to the card every month. As the charge card is not directly connected to a bank account, the cardholder must use another bank account to pay the invoice. There is no interest rate applicable to purchases (except normal interest rates applicable in cases of overdue payment of the invoice).
In our view, the functionality offered by charge cards is more akin to receiving an invoice from a merchant than the functionality offered by a credit card, as (i) there is no maximum spending limit, (ii) all transactions charged to the card are required to be paid in full every month and (ii) there is no interest rate applicable. The key benefit for the cardholder is not the receipt of credit, but rather enhanced cash flow management.
In our view, these features of the charge cards has certain implications for the application of the administrative regulation.
3 Application of the administrative regulation on charge cards
3.1 Charge cards and similar products should be exempt from the reporting requirement
The key issue is how the administrative regulation § 3 is to be interpreted in relation to charge cards.
In § 3 of the administrative regulation, a general distinction is made between credit agreements concerning a line of credit (nw. rammekreditt) and credit agreements concerning amortizing loans (nw. nedbetalingslån). For these two categories of credit agreements, the administrative regulation requires that a certain set of information is reported to the debt registries.
In our view, there are other categories of credit agreements in addition to the two categories mentioned in § 3. It should be clarified that credit agreements that do not fall within scope of either of these two categories (rammekreditt and nedbetalingslån), are exempted from the reporting requirement to debt registries.
One possible approach to this is to exempt all credit agreements which are encompassed by the Financial Contracts Act ("FCA") (Nw. Finansavtaleloven) section 44(2). The credit agreements mentioned in the FCA section 44(2) are, due to their nature, exempted from the regulation applicable to "normal" credit agreements in the FCA chapter 3. For example, the American Express charge cards where there is no pre-defined spending limit, no applicable interest rate and the credit is repaid within a month, are exempted from the FCA chapter 3 pursuant to FCA section 44 (2) letter a. This is because the credit is provided free of charge (there is no applicable interest rate). On the European level, this type of credit agreement benefits from the same exemption pursuant to the Consumer Credit Directive (2008/48/EC) art. 2 nr. 2 (f).
It is therefore reasonable to exempt the credit agreements mentioned in the FCA section 44(2), which includes the American Express charge cards, from the reporting requirement to debt registries as well.
A different approach is to specifically list the credit agreements which should be exempted from the reporting requirement to debt registries. We are aware that in Sweden for example, charge cards are exempted from the requirement to report to debt registries.
Strong policy considerations dictate that charge cards and similar products without a pre-determined credit limit, are exempted from the requirement to report to debt registries. Any information reported regarding such charge cards will not enhance the accuracy or reliability of the information in the debt registry. We refer to following:
- The American Express charge cards do not have a pre-determined credit limit, and each transaction with a charge card is approved or denied on an individual basis. It is therefore not feasible to provide information regarding a credit limit. Any pro-forma information given on the credit limit for such products will be artificial and will not give meaningful information.
- The credit is provided for a very short time, and the credit risk is therefore low, as the debtor is required to repay the full amount charged to the card every month. In this respect, the functionality offered by the charge cards are more akin to receiving an invoice from a merchant than the functionality offered by a credit card.
- Exempting charge cards from the reporting requirement will further promote the purpose of the Debt Information Act (gjeldsinformasjonsloven), as this will allow the debt registries to give a more accurate and true reflection of consumers' current debt levels.
Based on the above, we suggest that charge cards with no applicable interest rate and no pre-determined credit limit are exempted from the reporting requirement. We suggest to add the following wording in § 3 as a new subsection (4):
"Finansforetak skal ikke gjøre tilgjengelig gjeldsopplysninger for gjeldsinformasjonsforetak for kredittavtaler som gjelder
a) faktureringskort og andre produkter hvor kreditten tilbys rente- og kostnadsfritt og der det ikke er noen forhåndsbestemt kredittramme."
In addition to the charge cards offered by American Express, it may be reasonable to also exempt other credit agreements which could be listed as a new letter b in our above suggestion.
3.2 Provided charge cards with no pre-defined credit limit are not exempted - it should be clarified what type of information should be reported
In the unlikely event that you disagree with our suggestion above to exempt charge cards and similar products, the administrative regulation should be adjusted to properly accommodate such products. As a minimum, it should be clarified what type of information should be reported to the debt registries.
As we argued above, it is not feasible to provide information regarding a credit limit as there is no credit limit. Any pro-forma information given on the credit limit for such products will be artificial and will not give meaningful information. The reporting requirement must therefore be limited to information on the current outstanding balance (nw. utestående saldo).
In conclusion, we would like to reiterate our support for the new act on debt registries as an important tool in preventing debt problems among consumers. We believe that our suggestion above will contribute to enhancing the accuracy and reliability of the debt registries and further enhance the purpose of the act.
Thank you for considering our perspective.