Act on Mortgage Credit Activities and Certain Other Consumer Credits
Read more about what the legislative proposal entails and how it relates to the second Consumer Credit Directive.
Explained – what is the Act on Business with Housing Credit and Certain Other Consumer Credit?
The term refers to a Swedish regulatory framework that sets parameters for how lenders and credit intermediaries conduct activities involving mortgage credit and selected consumer credit. It forms part of financial regulation aimed at strong consumer protection, responsible lending and stability in the credit market. Through the implementation of the second Consumer Credit Directive 2023/2225 (CCD2), amendments are primarily made to the Consumer Credit Act and to the Act on Mortgage Credit Activities and Certain Other Consumer Credits (LVBK) which, according to the inquiry A New Consumer Credit Directive (SOU 2024:69), is proposed to replace the current title. The Swedish Financial Supervisory Authority (Finansinspektionen) is the intended supervisory authority with licensing and sanctioning tools.
When does the updated mortgage credit legislation become relevant?
The issue arises when firms intend to issue or intermediate mortgage credit. This includes when consumer credit is offered digitally or via partnerships. It also arises in restructurings, new distribution channels and the launch of new credit products. As the Act on Certain Consumer Credit Activities is wound down through separate legislation, market participants need to re-map applicable rules to the updated Act on Mortgage Credit Activities and Certain Other Consumer Credits.
Points to consider under the Act on Mortgage Credit Activities and Certain Other Consumer Credits
To comply with the framework, firms need to work holistically across governance, risk and compliance. Below are concrete areas that should be in place for implementation and business-as-usual.
- Secure the necessary licence from the Swedish Financial Supervisory Authority, including fit-and-proper assessments and governance requirements.
- Build a creditworthiness assessment process that uses verified data, plausibility checks and traceability.
- Keep pre-contractual information, contractual terms, post-contract information and information on the right of withdrawal up to date.
- Establish controls and monitoring: compliance oversight, risk reporting, internal audit and incident reporting.
- Train sales, customer service and credit functions on the new statutory requirements.
- Review marketing and digital interfaces to ensure they meet LVBK requirements.
- Introduce a complaints-handling process that includes customer feedback and continuous improvement.
Clear processes and controls improve customer outcomes and enable sustainable lending over time.
Act (2016:1024) on Mortgage Credit Activities and Certain Other Consumer Credits
Why is the Act on Mortgage Credit Activities and Certain Other Consumer Credits important?
The Act strengthens consumer protection. It clarifies requirements on creditworthiness assessment, disclosures and the handling of conflicts of interest, giving consumers better decision-making support and countering unsound lending. At the same time, Swedish rules are aligned with EU law through CCD2, facilitating operations on a modern, digitalised credit market.
For firms, it creates predictability in licensing processes and parameters for partnerships with credit intermediaries. When requirements on competence, documentation and internal control are met, the credit cycle becomes more robust and portfolios more resilient to volatility.
When the framework is followed, confidence in lenders and intermediaries increases. Clear communications, accurate pricing and orderly complaints handling contribute to stable customer relationships and healthy competition where good products are rewarded.
Frequently asked questions about the Act on Mortgage Credit Activities and Certain Other Consumer Credits
The renaming reflects that the framework is broadened to cover not only mortgage credit but also certain other consumer credit. CCD2 is implemented in Sweden mainly through amendments to the Consumer Credit Act and the updated Act (2016:1024) on Mortgage Credit Activities and Certain Other Consumer Credits, creating a coherent structure.
The Financial Supervisory Authority remains the supervisory authority, handling licensing, fitness assessments and sanctions. Firms should ensure that fit-and-proper reviews, reporting and internal control meet the updated requirements in the relevant statutes. Some firms that previously did not require a licence will need one under the updated Act (2016:1024) on Mortgage Credit Activities and Certain Other Consumer Credits, for example regarding BNPL products.
An effective model requires responsibility and control across several lines. Common building blocks often include:
- Compliance to interpret requirements, advise and monitor.
- Risk management for identification, measurement and reporting.
- Internal audit to assess effectiveness and adherence.
- First line of defence with documented business procedures.
- HR and training to ensure competence and continuity.
The difference mainly concerns purpose, security and risk profile. Mortgage credit is typically secured against residential property with longer maturities, while other consumer credit is often shorter-term, sometimes unsecured, and subject to tailored disclosure and pricing requirements. Separate processes are therefore needed for assessment, pricing and monitoring.
Firms need to review how costs and terms are presented in the flow and embed plausibility checks into the creditworthiness assessment.
The inquiry proposes an entry into force on 20 November 2026. This is set out in SOU 2024:69, where the retitled and expanded Act on Mortgage Credit Activities and Certain Other Consumer Credits is proposed to commence on that date, with certain transitional provisions.
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