On 3 September 2014, the Netherlands Authority for the Financial Markets (AFM) imposed an administrative fine of €300,000 on Beautiful Day B.V. The fine was imposed because in the period of May 2012 up to and including August 2013 Beautiful Day offered payday loans without holding an AFM licence. That constitutes an infringement of the Financial Supervision Act (Section 2:60, first subsection, Wft).
|Status of the legal proceedings
|Fine imposed||Objection||Appeal||Further appeal
||Submitted||Decision rendered||Submitted||Decision rendered|
(1) The AFM has declared the objection unfounded, while supplementing its reasons.
(2) The The District Court of Rotterdam declared the objection was unfounded.
Beautiful Day offered consumers the opportunity to borrow money quickly against high costs via the websites www.easycredit.nl and www.betaaldag.nl. Beautiful Day advertised that no costs were charged for the loan. In actual fact, consumers had to pay very high costs indeed.
Beautiful Day demanded a guarantee in order for consumers to qualify for a loan. Consumers could only receive a loan quickly and easily if they opted for a paid guarantee from Global Credit and Debt Management Services Limited (GCDMS), which is a party recommended by Beautiful Day. The costs of a €250 loan for 25 days were €55. This comes down to €803 on an annual basis (relatively 321.2%). GCDMS paid a considerable amount to Beautiful Day for these services each month. The GCDMS guarantee therefore forms part of the Beautiful Day revenue model.
It has been illegal since 25 May 2011 to offer pay day loans without an AFM licence. Beautiful Day is not exempted from this licence requirement.
It concerns a serious infringement. Beautiful Day took advantage of a group of vulnerable consumers who were unable to take out a more favourable loan in a regular manner, for example by being overdrawn on their payment account or by using a credit card. This involved the risk that these consumers became increasingly further buried in debt.
Providers of pay day loans require a licence if they charge more than minor costs. If that is the case they are not allowed to charge rates that exceed the maximum statutory interest rate of 15%.
A licence provides additional protection to consumers. Before the AFM grants a licence, it checks, inter alia, whether a company complies with the requirements of properness, expertise and integrity. Moreover, a company that holds a licence must comply with the so-called continuous rules of conduct. These rules concern, among other things, the obligation to take great care in the provision of services to consumers.
Amount of the fine
A basic amount of €2,000,000 applies for this type of infringement. The basic amount can be increased or decreased depending on whether the seriousness or duration of the infringement or the degree of culpability give reason to do so. In the present case, the AFM considers it appropriate to increase the basic amount by 25% on the basis of the seriousness of the infringement and to increase it by 25% on the basis of culpability.
When determining the amount of the fine, the AFM also takes into account the financial capacity of the offender. In the present case, the financial capacity of Beautiful Day constitutes the reason to set the fine at €300,000.
Interested parties can submit the AFM's judgment contained in the decision to the courts for review.
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.