AFM: ‘Be careful! Borrowing money costs money’ is a success

Credit warning sentence makes people think about the consequences of borrowing

Six months after its introduction, almost everyone in the Netherlands is familiar with the warning, ‘Be careful! Borrowing money costs money’. Moreover, consumer surveys by the Netherlands Authority for the Financial Markets (AFM) have shown that 73% of consumers have indicated that the sentence has made them more aware of the negative consequences of borrowing. Based on a representative random survey, the AFM has observed that loan providers have also properly applied the mandatory warning to radio, television and print media. Only Internet sites, particularly from small brokers, fail to include the warning or it does not comply with the rules.

The consumer survey shows that two-thirds (65%) of consumers can spontaneously recall the sentence, while another 22% have heard of it. Therefore, a total of 87% of the Dutch population is familiar with the warning sentence. Nearly three-quarters of consumers indicate that the sentence makes them think about the negative consequences before concluding a loan. Some 84% of consumers are (very) positive about the warning sentence. The study also shows that more than 95% of consumers understand the message of the symbol.

Since its introduction, the warning has been properly applied on television, radio and in the print media. A representative random survey from the AFM shows that the institutions that advertise through these channels are usually the large(r) financial enterprises. The websites of financial enterprises, also usually the sites of small(er) brokers, are not as meticulous in applying the warning. Four out of five sites investigated did not comply with the credit warning rules or did not entirely comply with them. 57% of the sites that did not comply with the rules failed to include the warning, even though it is mandatory. Somewhat less than half (43%) of the sites included the warning but did not comply with the rules. The AFM will continue to monitor the proper use of this mandatory warning sentence and take action, if necessary.

The introduction of a loan advertisement warning is one of the measures taken by the cabinet to handle the increasing problems related to debts. It is intended to make consumers more aware of the costs and risks of loans. Since 1 April 2009, the sentence (with symbol) has been mandatory for all advertisements concerning credit on television, radio, Internet and in print media. General advertisements for mortgages and advertisements that relate to the purchase of a private home are exempted.

The consumer survey was conducted by the research agency Gfk Panel Services, as commissioned by the AFM. The questionnaire was completed by 1,038 consumers who can be divided into two groups: consumers who recently concluded a mortgage (358) or a consumer loan (229) and a representative sample of the Dutch population (451).
For the random survey, all credit advertisements in the national daily press, radio and television during a 3-month period were assessed. 151 websites that include credit advertising were also assessed.

The AFM promotes fairness and transparency within financial markets. We are the independent supervisory authority for the savings, lending, investment and insurance markets. The AFM promotes the conscientious provision of financial services to consumers and supervises the honest and efficient operation of the capital markets. Our aim is to improve consumers’ and the business sector’s confidence in the financial markets, both in the Netherlands and abroad. In performing this task the AFM contributes to the prosperity and economic reputation of the Netherlands.

The AFM is committed to promoting fair and transparent financial markets.

As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.

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