Poor creditworthiness assessment under the Consumer Credit Act – the Swedish Financial Supervisory Authority (FI) sanctions Avida Finans

On 11 November 2025, the Swedish Financial Supervisory Authority (FI) imposed a remark and an administrative fine of SEK 20 million on Avida Finans AB. The decision is based on shortcomings in the firm’s creditworthiness assessment under section 12 of the Consumer Credit Act – a provision designed to protect consumers from being granted loans they cannot repay. The decision underscores the need for lenders to maintain well-coordinated systems, clear procedures and rigorous control over customer data handling. With specialist consumer credit counsel, firms can design, test and assure processes that minimise the risk of similar breaches.

The creditworthiness assessment requirement under the Consumer Credit Act

Under section 12 of the Consumer Credit Act, a lender must assess whether the consumer has the financial capacity to meet their obligations under the credit agreement. The assessment must be based on sufficient information and data about the consumer’s financial circumstances. A lender may grant credit only if the assessment indicates that the consumer is deemed able to repay the loan and fulfil their obligations.

In practice, the assessment comprises three steps:

• The lender must collect information about the consumer and their finances
• Based on the collected information, the lender must calculate the consumer’s ability to repay the loan
• Using that assessment, the lender must decide whether to grant or decline the credit

A deficiency in any of these steps may constitute a breach of the law. Although a deficiency may relate to complex processes and thus appear to be excusable to some degree, it remains the lender’s duty to perform the assessment in accordance with the Consumer Credit Act. The provision is a central component of consumer protection and aims primarily to prevent over-indebtedness.

Shortcomings in Avida Finans’s creditworthiness assessment

The Financial Supervisory Authority’s investigation shows that Avida Finans generally had a well-developed creditworthiness assessment process. Avida Finans deems a consumer to have sufficient repayment capacity to warrant granting credit only if the calculation yields a positive result. However, there was a coordination defect between the company’s application form and its internal calculation model, which produced erroneous results in the company’s calculation (KALP).

The issue arose when the company handled data on housing costs for married or cohabiting consumers. The cost was halved both by the consumer and in the calculation model, which meant that an unduly low housing cost was used in the calculation. As a result, at least 34 customers were granted loans even though the calculation should have shown a negative result, and the consumers should therefore have been assessed as lacking repayment capacity.

The Financial Supervisory Authority concludes that the fault did not lie in the assessment model itself, but in how information was retrieved and interpreted between systems. In other words, it was a defect in the internal governance and coordination of the process – an area specifically emphasised in the supervisory authority’s requirements on sound internal control. Although Avida Finans had identified the issue before the reviewed period, credits continued to be granted on incorrect grounds during the period under review.

The Financial Supervisory Authority’s assessment

The Financial Supervisory Authority considered intervention necessary, as the breaches were neither minor nor excusable. Even if the proportion of erroneous credits was small relative to the firm’s total lending, the situation concerned the risk of over-indebtedness, a core provision of the Consumer Credit Act that directly affects consumer protection.

The authority emphasises that even a limited system defect can have serious consequences when it affects fundamental assessments of a customer’s repayment capacity. Because Avida Finans was already aware of the issue but nonetheless failed to implement temporary safeguards, the authority considers the firm to bear a high degree of responsibility.

The authority also stresses that the purpose of the creditworthiness assessment is preventive: to protect consumers in advance from over-indebtedness. The breach itself is sufficient to warrant intervention, as it undermined the statute’s protective mechanism.

Remark and administrative fine

The Financial Supervisory Authority decided to issue Avida Finans with a remark instead of a warning, as the breaches were not considered so serious that the firm’s authorisation should be questioned. To ensure the remark carries sufficient weight, it is accompanied by an administrative fine of SEK 20 million, which the authority considers proportionate to the firm’s turnover and financial position.

What we can learn from the supervision

The decision against Avida Finans illustrates that creditworthiness assessments must not only be formally correct: they must also function in practice and be coordinated across systems and channels. A seemingly minor system defect can have significant legal and financial consequences.

Three key lessons:

• Lenders must ensure that all data used in the assessment are complete, accurate and handled consistently.
• Internal models and forms should be reviewed regularly from both legal and technical perspectives.
• Even a seemingly limited deviation can amount to a breach of section 12 of the Consumer Credit Act.

The Financial Supervisory Authority’s decision clarifies that responsibility for a proper creditworthiness assessment cannot be delegated away – whether to technical systems, intermediaries or credit brokers. The lender bears ultimate responsibility for safeguarding consumer protection.

How Morlings Consulting can help

For financial institutions, the decision is a reminder of the importance of scrutinising both the legal and practical limbs of the creditworthiness assessment. At Morlings Consulting, we provide practical support to ensure compliance with the Consumer Credit Act and the Financial Supervisory Authority’s requirements. Our lawyers help firms develop and review assessment procedures, governance documents and internal controls – so lending is both commercially sound and legally robust.