Spain Moves to Protect Consumers from Abusive Credit Practices with New Legislation

Spain is taking significant steps to combat the manipulation and abusiveness prevalent in its consumer credit market, which totals €114.673 billion. The government has introduced a draft law aimed at strengthening consumer protections against widespread unfair financial practices, particularly targeting revolving credit cards and microcredit loans.

Economists George A. Akerlof and Robert J. Shiller, in their book translated into Spanish as "Economía de manipulación," highlight how economic manipulation imposes heavy costs on consumers — a situation clearly visible in Spain's financial market, known as one of the most manipulated in Europe. Court rulings have frequently condemned abusive credit practices, underscoring the urgency for regulatory reform.

The Spanish Supreme Court has drawn attention to revolving credit cards, warning they can trap consumers in prolonged debt cycles due to extremely high-interest rates and a lack of transparency—practices the Court labels as abusive. Meanwhile, microcredits, often taken in emergencies, sometimes carry annual interest rates exceeding 3,000%, sparking calls for stricter legal controls.

The draft law seeks to align Spain's regulations with the European Consumer Credit Directive enacted in October 2023. One of its pivotal measures includes capping interest rates at 22% for consumer credit products, including revolving cards. However, its effectiveness depends on political will, as the legislation requires support from right-wing parties in the Spanish parliament.

This legislative move reflects an effort to reduce information asymmetry between lenders and consumers and to curb predatory financial practices. If passed, it could mark significant progress in protecting Spanish consumers from debt traps and excessive financial burdens in a market long criticized for manipulation and opacity.