Finance Min: "Free" smartphones actually a loan

A phone subscription that includes a "free" phone is in fact a loan and it should therefore comply with the rules of lending. Minister Jeroen Dijsselbloem made this decision following a judgment of the Supreme Court on June 13th last year. The court ruled that a telephone subscription is a loan and that the Act on Financial Supervision is applicable here. This Act also applies to banks, stores and car dealers that offer deferred payment on the sale of goods. After the judgement, telecom providers, VNO-NCW and MKB-Nederland asked that an exeption be made for the telecom sector. But the Finance Minister decided against this, calling it unjustifiable in a letter to the Tweede Kamer, lower house of parliament, on Wednesday. According to the Minister, many people struggle with debt problems because they borrow too much money. Applying credit rules to telephone subscription would make a valuable contribution to addressing the debt problem. It also forces the industry to be more transparent about what they are offering. In practice this means that phone service providers will have to inform consumers on the credit terms, including an overview of the interest rate and a loan warning - borrowing money costs money. The provider will also have to check whether the consumer can afford the additional monthly charges. If the subscription is more than 250 euros, it will have to be registered with the Bureau of Credit Registration, so that the information on the loan is available to other lenders.