Market participants for consumer credit

The consumer credit market consists of lending institutions and intermediaries. All parties use direct and indirect distribution.

Consumer credit market

consists of:

  • Lending institutions , such as banks (A) and finance companies (B), as well as life insurance companies (C) and municipal credit banks (D). Special form: banks of loan (E).
  • Intermediaries : professional credit intermediary (F), insurance intermediary (G) and the supplier (H). All adhere to the VFN code of conduct.

The letters behind the settings refer to below.

  • Direct financing: when surplus and deficit households meet directly. However, this is often not possible.
  • Indirect financing: with the help of financial institutions, in such a way that they meet the financing needs of the deficit households.
  • Transformation function: converting surplus resources to the needs of the borrower.

Banks (A)

These are affiliated with the Dutch Banking Association (NVB), which has drawn up the General Banking Conditions. Banking activities consist of the interest margin business (attracting money and then putting it away at a higher interest rate; the bank itself runs the default risk) and the commission business (brokering in securities transactions, selling insurance products and providing payment services based on commission). There are 4 core functions:

  1. lending to companies and private individuals
  2. attract money
  3. taking care of payment transactions
  4. carrying out the brokerage and commission business

If the repayment of a loan is linked to a life insurance policy, there is both an interest margin business and a commission business.

Finance companies (B)

Focused on providing credit to private individuals and increasingly the small business market. Origin of the installment system: Singer requested a modest initial down payment, followed by a number of monthly payments. It therefore took quite a long time for factories to receive the requested funds for the item. However, fixed costs continued, depleting financial resources. The solution was to set up independent finance companies. These paid the amount to the supplier and took care of the risk, administration and collection. Most independent ones have been taken over by banks and insurers in recent years. Others operate as subsidiaries of products or suppliers of consumer durables. A financing company does not have the same status as a bank in terms of attracting funds. The companies have united in the Ver. of Financing Companies in the Netherlands (VFN). VFN code of conduct (binding d): says something about, among other things, acceptance policy, maximum desirable duration, complaints procedure. The code of conduct is binding. Integrity is important. In addition, preventing and combating fraud. It is important that the lender:

  • sufficiently identifies the client and consults the systems for fraud prevention and registration;
  • investigates the applicant’s creditworthiness.

When transferring, the existing lender must (mandatory) inform the new one about the current loans. Complaints go through the VFN Supervisory Committee, decisions are binding for the members. Card issuers :

Credit cards:

Payment method in shops, restaurants and car rental companies, up to a certain amount (limit), also for cash withdrawals (via card with PIN code). Expenses are only debited from the checking account some time later: deferred payment credit, without interest. Credit cards that only offer this deferral are called charge cards. Sometimes the bill is not all at once but in installments. Travel insurance or insurance against theft is also sometimes included.

Independently operating card companies:

Arrange the cards and administration yourself (such as American Express)


Bank credit cards (bank and Mastercard or Visa logo). Bank arranges card and limit, card company arranges administration (direct debit).

Non-financial institutions:

Collaboration with card company (co-branded, 2 logos). E.g. travel agency, airline, car importer or consumer organization such as ANWB.

Regular customer cards (private label cards):

Retailers, large department stores, retail chains or financing subsidiaries. Goal: promote sales and monitor purchasing behavior. Payment is usually made in installments. The card is usually limited to expenditure at the issuer and not for cash ((revolving) goods credit).

Life insurance companies (C):

Mainly providing mortgage credit when purchasing your own home. Also a role in repayment through life insurance. It is also possible to obtain credit by borrowing the policy (advance on the benefit). Mail order companies : offer the option of purchasing on credit ((revolving) goods credit), often through their own financing subsidiaries.

Government (D):

acts as a provider of credit to consumers through: Municipal Credit Banks (GKBs) via

  • Social lending: as a PL for clients with low incomes, low-income start-up entrepreneurs, the elderly and people with damaged credit history.
  • Normal lending: standard expiring and revolving credits.
  • Debt assistance: aimed at people in financial problems, through restructuring loans or debt mediation.
  • Financing services for the municipality: implementation of municipal policy for home improvement, subsidy provision or provision of to municipal employees.

GKBs are affiliated with Ned.Ver. for People’s Credit (NVVK) and have their own code of conduct.

  • Municipal Social Services (GSDs): implementation of the General Assistance Act pursuant to the Work and Social Assistance Act (WWB). Interest-free benefit at the level of the social minimum, deductible. of age and family composition. This loan assistance is for the purchase of durable consumer goods upon presentation of proof of purchase, based on statutory law. Creditworthiness plays no role.
  • Information Management Group: implementation of the Study Financing Act, in the form of a performance grant (basic grant plus possibly additional grant), depending on of parents’ income and own situation. Debt is forgiven if student graduates quickly enough. An additional loan can possibly be provided that must be repaid later.

Loan banks (E) (also called pawn shop or pawn shop):

: financial institution that lends money to private individuals for the short term on the collateral of movable property (e.g. jewelry). The loan amount is paid out and proof of pledge (bearer certificate) is provided. The standing time (borrowing period) is usually short. When the pledged object is unloaded, the pledgor repays the loan amount plus the lending right (interest and costs). To combat usurious practices, the Pawnshop Act has been introduced: it sets conditions for lending and regulates the conduct of lending at banks. Municipal loan banks: established by decision of the municipal council. Private loan banks: can only be established after permission from B&W. A property may not be sold earlier than 6 months after borrowing.


Direct distribution is via:

  • offices(net)
  • direct writing, through mailings, advertisements and brochures

Indirect distribution goes through:

  • professional credit intermediaries (F): many mediate for multiple lenders. Some have been given power of attorney = making decisions at the expense and risk of society. A limited number are affiliated with the Ned.Ver. of independent independence Financial service providers (NVF). Know own code of conduct (adhere to WCK/WFD provisions, no discrimination, financing diplomas). Complaints via the Supervisory Board of the NVF.
  • insurance intermediaries (G): contribution to the turnover of financing companies. Have a broader package, including savings and investments. Larger offices are affiliated with Ned.Ver. of insurance advisors and financial service providers (NVA). The others have united under Ned. Association of Independent Financial and Insurance Advisors (NBVA).
  • suppliers (H): of vehicles and vessels in particular, via hire purchase (based on a three-party agreement) and revolving goods credit. Credit products through mail order companies, department stores and retail chains fall under small goods credit.