Act on Consumer Loan Businesses

Act on Consumer Loan Businesses

Hereby is promulgated the Act on Consumer Loan Businesses, cf. Act No. 115 of 2 February 2025, with the amendments resulting from Section 10 of Act No. 712 of 20 June 2025 and Section 3, item 21 (partially), of Act No. 1322 of 20 November 2025.

The amendments resulting from Section 3, items 1-20, 21 (partially), and 22-36, of Act No. 1322 of 20 November 2025 on amendment of the Act on Credit Agreements, the Act on Marketing, the Act on Consumer Loan Businesses, and various other Acts (Implementation of the revised Consumer Credit Directive), are not incorporated into this consolidated act, as these enter into force on 20 November 2026, cf. Section 6, subsection 1, of Act No. 1322 of 20 November 2025.

Chapter 1
Scope and Definitions

Section 1. This Act applies to consumer loan businesses that offer:

1. credit agreements provided wholly or partly with a view to the acquisition of goods or services from another business,
2. credit agreements provided independently of a purchase of a good or service, or
3. credit agreements that constitute an independent business area of the business, and where the credit is provided with a view to the acquisition of goods or services from the business.

Subsection 2. The Act does not apply to the following consumer loan businesses, except for Section 9, Section 11a, subsections 1-5, and Sections 11b and 11c:

1. Financial undertakings covered by Section 5, subsection 1, item 1, of the Act on Financial Business and foreign financial undertakings that conduct business in this country through branch establishment or cross-border provision of services.
2. Real estate credit companies covered by Section 1, subsection 2, item 2, of the Act on Real Estate Credit Companies.

Subsection 3. The Act further does not apply to consumer loan businesses to the extent that they offer:

1. agreements for the purchase of goods or services where the provider accepts, interest-free and without costs, that the consumer pays for the good or service at a time later than the delivery date, but not later than 90 days after the delivery date, and where there is no third party providing credit,
2. payment card agreements with deferred payment where the total transaction amount is debited to the cardholder's account on a specific date no later than 50 days after the transaction, without interest or costs being payable in connection with the deferred payment,
3. credit agreements where the credit is provided interest-free and without other costs, and where the business providing the credit is covered by Section 389, subsection 1, item 2, of the Act on Financial Business and receives funds for use in charitable or other public interest purposes pursuant to Section 8A, subsection 1, of the Tax Assessment Act,
4. rental or lease agreements where there is no obligation to purchase the subject matter of the agreement, neither in the agreement itself nor in a separate agreement,
5. credit agreements in connection with a collective agreement conflict, when the consumer loan business is a trade union organization covered by the conflict,
6. credit agreements to employees of the consumer loan business, or
7. loans of money against pledge, including pledge in lottery tickets covered by the Act on Trade in Second-hand Goods, and pawnbroking business.

Subsection 4. Section 9 does not apply to the following:

1. Credit agreements concerning forbearance without costs regarding the payment of existing debt.
2. Credit agreements that are the result of a settlement entered into before the court.
3. Credit agreements according to which the business and the consumer agree on forbearance with payment or agree on how the credit is to be repaid. This applies only if the consumer has already defaulted on the original credit agreement, and where such arrangements can be expected to avert a lawsuit regarding the default in question, and the consumer is not placed in a worse position than stipulated in the original credit agreement. Section 9, subsection 3, applies nevertheless.

Subsection 5. Sections 3-5, 17, and 18 do not apply to payment institutions, e-money institutions, and businesses with a limited license to offer payment services, cf. the Act on Payments.

Subsection 6. Section 11a, subsections 1 and 6, also applies to credit agreements where the credit is provided by other businesses than consumer loan businesses or by non-businesses.

Section 2. In this Act, the following terms are defined as:

1. Consumer loan business: A business that offers credit agreements to consumers, cf. Section 1, subsection 1.
2. Consumer: A person who, in connection with transactions covered by this Act, acts primarily outside their trade or profession.
3. Credit agreement: An agreement whereby a business provides or undertakes to provide a consumer credit in the form of forbearance with payment, a loan, or another similar form of financial arrangement, except for agreements on the continuous supply of services or goods of the same kind, where the consumer pays for the services or goods in installments as long as they are supplied.
4. Overdraft: An express credit agreement whereby a creditor makes funds available to a consumer that exceed the current balance on the consumer's current account.

Chapter 2
License, Suitability and Integrity Requirements, etc.

License

Section 3. A consumer loan business must have a license from the Danish Financial Supervisory Authority (Finanstilsynet) to conduct business.

Subsection 2. The Finanstilsynet grants licenses to businesses under subsection 1 when the following conditions are met:

1. The business is established in Denmark or another country within the European Union or a country with which the Union has concluded an agreement in the financial sector.
2. The business's board of directors and management, or the owner of a consumer loan business that is a sole proprietorship, or, if the business is conducted as a legal entity without a board of directors or management, the person or persons responsible for managing the business, meet the conditions in Section 4.
3. The business has business procedures for compliance with rules on fair business practices and good practice, cf. Section 7, for creditworthiness assessment, cf. this Act's Section 9 or Section 7c of the Act on Credit Agreements, and for identification of target groups, cf. Section 10.

Subsection 3. An application for a license must contain the information necessary for the Finanstilsynet to assess whether the conditions in subsection 2 are met, and a description of the activities the business intends to conduct.

Subsection 4. An application for a license under subsection 1 must be submitted via the Finanstilsynet's self-service solution, accompanied by the necessary information, cf. subsection 3. If an application exceptionally cannot be submitted via the self-service solution, the application, accompanied by the necessary information, must be submitted electronically to the Finanstilsynet using the Finanstilsynet's notification form.

Suitability and Integrity Requirements

Section 4. A member of the board of directors or a member of the management of a consumer loan business, or the owner of a consumer loan business that is a sole proprietorship:

1. must have sufficient knowledge, professional competence, and experience to be able to perform the duties or position,
2. must have a sufficiently good reputation and be able to demonstrate integrity, honesty, and sufficient independence in performing the duties or position,
3. must not have been held criminally liable for violations of the Criminal Code, financial legislation, or other relevant legislation, if the violation entails a risk that the person cannot perform their duties or position in a satisfactory manner,
4. must not have filed a petition for or be under restructuring proceedings, bankruptcy, or debt settlement, and
5. must not otherwise have exhibited such behavior that there is reason to assume the person will not perform the duties or position in a responsible manner.

Subsection 2. If a person assumes a position as a board member or a position as a director in a consumer loan business, the Finanstilsynet ensures that the person meets the suitability and integrity requirements in subsection 1. The Finanstilsynet makes a decision on whether the person can hold the position or duties in the business in question. The first and second sentences apply correspondingly to the owner of a consumer loan business that is a sole proprietorship.

Subsection 3. If the Finanstilsynet assesses that the person does not meet the requirements in subsection 1, items 2-5, the duration of the decision must be stated in the decision.

Subsection 4. The Finanstilsynet may, in special cases where the Finanstilsynet assesses that a person does not have sufficient professional prerequisites or experience relative to the position as a member of the management to which the person is assessed, make a decision that the person may hold the position under strictly defined conditions.

Subsection 5. A member of the board of directors or a member of the management of a consumer loan business, or the owner of a consumer loan business that is a sole proprietorship, must notify the Finanstilsynet of matters referred to in subsection 1 in connection with their entry into the management of the consumer loan business, or, as far as a consumer loan business that is a sole proprietorship is concerned, in connection with the application for a license, cf. Section 3, subsection 2, item 2, and of matters referred to in subsection 1, items 2-5, if these matters change subsequently.

Subsection 6. If a consumer loan business is conducted as a legal entity without a board of directors or management, subsections 1-5 apply to the person or persons responsible for managing the consumer loan business.

Registration and Reporting

Section 5. The Finanstilsynet establishes and maintains a public register of businesses that have a license as a consumer loan business, cf. Section 3.

Subsection 2. The register must contain the following information:

1. Name, address, and CVR number of the business.
2. Names of persons in the management of the business.

Section 6. A consumer loan business must report information to the Finanstilsynet regarding the business's credit agreements.

Subsection 2. The Finanstilsynet establishes detailed rules regarding the reports mentioned in subsection 1, including regarding form and frequency.

Chapter 3
Good Practice, etc.

Section 7. A consumer loan business must conduct business in accordance with fair business practices and good practice within the business area.

Subsection 2. The Minister for Business may establish detailed rules on fair business practices and good practice for consumer loan businesses and on price information for credit agreements.

Subsection 3. The Finanstilsynet may, after consultation with representatives of consumers and relevant business organizations, draw up and publish guidelines on fair business practices and good practice in specifically specified areas, which may be considered significant, particularly from the perspective of consumers.

Section 8. Actions contrary to rules issued pursuant to Section 7, subsection 2, incur liability for damages in accordance with the general rules of Danish law.

Processing of Personal Identification Numbers

Section 8a. Consumer loan businesses may process information about personal identification numbers for the purpose of necessary unique identification in relation to existing customer relationships when performing administrative tasks and advisory services.

Competence Requirements

Section 8c. The Minister for Business establishes detailed rules on competence requirements for employees at consumer loan businesses and credit intermediaries.

Creditworthiness Assessment

Section 9. If a credit agreement is not covered by Section 7c of the Act on Credit Agreements, a consumer loan business must, before entering into the credit agreement, assess the consumer's creditworthiness based on sufficient information, which, where relevant, is obtained from the consumer, and, where necessary, by searching in relevant databases.

Subsection 2. If the consumer loan business and the consumer agree after entering into the credit agreement to change the total credit amount, the consumer loan business must update the financial information it has about the consumer. Before any significant increase in the total credit amount, the consumer loan business must again assess the consumer's creditworthiness.

Subsection 3. If a request for credit is rejected based on a search in a database, the consumer loan business immediately notifies the consumer of the result of such a search and provides the consumer with further information about the database in question. This notification must be made free of charge to the consumer.

Chapter 4
Identification of Target Groups

Section 10. Before a consumer loan business offers credit agreements to consumers, the business must identify the relevant target group for the type of credit agreement in question.

Subsection 2. The consumer loan business must ensure that the type of credit agreement is appropriate for the interests, purposes, and characteristics of the identified target group. In this connection, the business must assess the target group's financial capacity.

Subsection 3. The consumer loan business must identify groups of consumers where the type of credit agreement is assessed not to be appropriate for the consumers' interests, purposes, and characteristics.

Section 11. The consumer loan business may only develop and offer products with properties, costs, and risks that correspond to the interests, purposes, and characteristics that characterize the identified target group, cf. Section 10, subsections 1 and 2.

Subsection 2. The consumer loan business may only offer the product to a consumer who does not belong to the identified target group, cf. Section 10, subsection 3, in sufficiently justified cases.

Chapter 4a
Prohibition on Entering into Certain Credit Agreements, etc.

Section 11a. A natural or legal person may not enter into a credit agreement with a consumer if the annual percentage rate of charge (APRC) exceeds 35 percent. The annual percentage rate of charge is calculated according to Section 16 of the Act on Credit Agreements.

Subsection 2. The provision in subsection 1 does not apply to mortgage credit agreements.

Subsection 3. A consumer loan business that has a license as a consumer loan business under Section 3, subsection 1, and that has entered into a credit agreement with a consumer in violation of subsection 1, cannot claim higher costs than what corresponds to an annual percentage rate of charge of 35 percent. The first sentence also applies to financial undertakings under Section 5, subsection 1, item 1, of the Act on Financial Business and to foreign financial undertakings that conduct business in this country through branch establishment or cross-border provision of services.

Subsection 4. If subsection 3 results in a reduction of the outstanding debt, the consumer must pay this in accordance with the arrangement agreed with the consumer loan business, provided that the reduction is applied to the installments that fall due first.

Subsection 5. A consumer loan business that has entered into a credit agreement with a consumer in violation of subsection 1 must recalculate the credit agreement.

Subsection 6. A natural or legal person who is not a consumer loan business and who has entered into a credit agreement in violation of subsection 1 can only claim repayment of the total credit amount. The first sentence also applies to consumer loan businesses that do not have a license as a consumer loan business under Section 3, subsection 1. The first sentence does not apply to financial undertakings under Section 5, subsection 1, item 1, of the Act on Financial Business and to foreign financial undertakings that conduct business in this country through branch establishment or cross-border provision of services.

Section 11b. A natural or legal person may not charge additional costs, including costs in connection with default on the obligations set forth in a credit agreement, when the consumer has paid costs that together amount to 100 percent of the total credit amount. The first sentence also applies to a natural or legal person to whom the credit agreement is transferred.

Subsection 2. Subsection 1 does not apply to the following agreements:

1. Mortgage credit agreements.
2. Overdrafts or revolving credits that are not required to be fully repaid before a date set in advance.

Section 11c. A consumer loan business must, upon request from a consumer, change an overdraft or a revolving credit that is not required to be fully repaid before a date set in advance into a credit agreement with installments.

Chapter 5
Disclosure of Confidential Information

Section 12. A consumer loan business and its employees must not unauthorizedly disclose or exploit confidential information that the business or its employees have become aware of in the course of performing their duties.

Subsection 2. The person receiving information under subsection 1 is subject to the duty of confidentiality in subsection 1.

Chapter 6
Whistleblower Scheme

Section 13. A consumer loan business must have a scheme where its employees can report violations or potential violations of the regulation supervised by the Finanstilsynet, committed by the business, including by employees or members of the board of directors in the business, via a special, independent, and autonomous channel. Reports to the scheme must be able to be made anonymously. The business must follow up on reports to the scheme and be able to document in writing how the business has followed up on the reports. The Act on Protection of Whistleblowers applies to the scheme in the first sentence.

Subsection 2. The scheme may be established via a collective agreement.

Subsection 3. The scheme applies only to a consumer loan business that employs more than five employees. The scheme must be established no later than 3 months after the business has hired the sixth employee.

Subsection 4. The Finanstilsynet may, in special cases, grant dispensation from the requirement in subsection 1, if the Finanstilsynet assesses that it would be pointless to establish a scheme.

Section 14. A consumer loan business must not subject employees or former employees to unfavorable treatment or unfavorable consequences as a result of the employee or former employee having reported the business's violation or potential violation of the regulation supervised by the Finanstilsynet to the Finanstilsynet or to a scheme at the business. The same applies to the determination, allocation, and payment of variable salary to employees or former employees.

Subsection 2. Employees or former employees may be awarded compensation in accordance with the principles of the Act on Equal Treatment if their rights have been violated by a breach of subsection 1. The compensation is determined with regard to the employee's or former employee's period of employment and the circumstances of the case otherwise.

Subsection 3. Subsections 1 and 2 cannot be derogated from to the detriment of the employee or former employee.

Section 14a. If an employee or former employee and a consumer loan business enter into an agreement containing a confidentiality clause, it must be stated in the agreement that the employee or former employee is not barred from reporting information about violations or potential violations of the regulation supervised by the Finanstilsynet to public authorities.

Subsection 2. Notwithstanding subsection 1, the employee or former employee is not barred from reporting information about violations or potential violations of the regulation supervised by the Finanstilsynet to public authorities, even if such a prohibition is included in an agreement between the employee or former employee and the consumer loan business. The same applies to reports to schemes under Section 13.

Chapter 7
Supervision, etc.

Supervisory Authority

Section 15. The Finanstilsynet ensures compliance with this Act by consumer loan businesses, except for Section 14, and ensures compliance with rules issued pursuant to the Act by consumer loan businesses.

Subsection 2. The Board of the Finanstilsynet participates in the supervision under subsection 1 with the competence that the Board is granted pursuant to Section 345, subsection 12, of the Act on Financial Business.

Subsection 3. The Finanstilsynet may order the natural and legal persons covered by this Act to take necessary measures within a specified deadline in case of violation of provisions in the Act or rules issued pursuant thereto.

Obtaining Information

Section 16. Consumer loan businesses and suppliers and subcontractors to these must provide the Finanstilsynet with the information necessary for the Finanstilsynet's operations.

Subsection 2. Businesses and suppliers and subcontractors to these, who have provided information under subsection 1, are obliged to correct the information to the Finanstilsynet as soon as possible if the business or supplier or subcontractor to this subsequently establishes the following:

1. The information was not correct at the time of provision.
2. The information has subsequently become misleading.

Subsection 3. The Finanstilsynet may at any time, upon proper identification and without a court order, gain access to consumer loan businesses for the purpose of obtaining information, including through inspections.

Subsection 4. The Finanstilsynet may at any time, upon proper identification and without a court order, gain access to a supplier or subcontractor for the purpose of obtaining information about the outsourced activity. The Finanstilsynet's physical access to the supplier's premises must be included as a requirement in the outsourcing contract concluded between the outsourcing business and the supplier. If an outsourcing contract does not contain the requirement for the Finanstilsynet's physical access to the supplier's business, the Finanstilsynet may require that the outsourced activity henceforth be performed either by the outsourcing business itself or outsourced to another supplier within a deadline specified by the Finanstilsynet.

Subsection 5. The Finanstilsynet may require access to all information, including accounts and accounting material, extracts from books, other business documents, and electronically stored data, which are deemed necessary for the Finanstilsynet's decision on whether a business or person is covered by the provisions of this Act.

Subsection 6. The Finanstilsynet may obtain information under subsections 1 and 3-5 for use by the Faroese supervisory authorities, cf. Section 19, subsection 6, item 11.

Order to Resign from Duties, etc.

Section 17. The Finanstilsynet may order a member of the board of directors in a consumer loan business to resign from their duties within a deadline set by the Finanstilsynet, if the board member cannot perform the duties pursuant to Section 4, subsection 1, items 2-5.

Subsection 2. The duration of an order issued under subsection 1 based on Section 4, subsection 1, items 2-5, must be stated in the order.

Subsection 3. The Finanstilsynet may order a member of the board of directors in a consumer loan business to resign from their duties when charges have been brought against the board member in a criminal case for violation of the Criminal Code, financial legislation, or other relevant legislation, until the criminal case is resolved, if a conviction would entail that the board member does not meet the requirements in Section 4, subsection 1, item 3. The Finanstilsynet sets a deadline for compliance with the order.

Subsection 4. The Finanstilsynet may, on its own initiative or upon application, withdraw an order issued to a board member under subsections 1 and 3. If the Finanstilsynet rejects an application for withdrawal, the applicant may demand that the rejection be brought before the courts by the Finanstilsynet. A request to this effect must be submitted to the Finanstilsynet no later than 4 weeks after the rejection is communicated to the applicant. A request for judicial review may, however, only be made if the order is not time-limited and at least 5 years have elapsed from the date of issuance of the order, or at least 2 years after the Finanstilsynet's rejection of the withdrawal has been upheld by judgment.

Subsection 5. The Finanstilsynet may revoke the consumer loan business's license, cf. Section 18,