How New EU Rules Made Your Loans More Expensive to Help Big Banks

Until 2022, a saver in Portugal could easily borrow money against their investments at a low interest rate of 3−5%. They could use that cash for anything—a home repair, a tax bill, or a family emergency. Today, that option is gone. New European Union rules have forced brokers to stop this practice, leaving people to face bank loans with interest rates of 11% to 17%.

This wasn't an accident. It was the result of a paper trail of specific laws, technical rules, and boardroom decisions that have benefited big banks at the expense of ordinary people.

The Day the Rules Changed for Millions

The change happened suddenly for investors. On August 30, 2022, the broker DEGIRO officially changed its rules, stating that borrowed money "may only be used to carry out transactions in Financial Instruments." This blocked over one million clients in the EU from taking cash out.

Then, on April 3, 2023, Interactive Brokers sent a notice to its half a million European clients, saying they "may no longer withdraw cash if that would create or increase a margin loan." The door was slammed shut.

The Paper Trail: How Brussels Did It

A series of specific EU decisions, made by top officials, led to this clampdown.

It started with a rule called MiFID II. The EU’s main market authority, ESMA, led by its chair Verena Ross, used this rule to argue that broker loans should only be for buying stocks.

Then came the first major blow on June 26, 2021. A powerful new set of rules for investment firms, known as IFR and IFD, came into force. These rules, pushed by the office of EU Commissioner Mairead McGuinness, made it extremely expensive for brokers to let customers withdraw cash. The rules hit brokers’ profits directly for every euro that left their system.

The second blow was delivered on November 14, 2022. The European Banking Authority (EBA), chaired by José Manuel Campa, issued a new standard that officially labeled these cash loans as a special risk. This gave regulators in every country the power to punish brokers for offering them.

The final nail in the coffin was the new Consumer-Credit Directive on October 18, 2023. This law meant that if brokers wanted to keep offering cash loans, they would need to act like a full bank, which was impossible for them.

Was This Really About Safety?

Regulators in Brussels now say these cash loans were never really allowed. But critics point out a major flaw in that story: these services were offered safely for over a decade, and they were approved every year by national regulators like the AFM in the Netherlands, led by Laura van Geest, which oversees DEGIRO.

The real reasons for the change seem to be about money and politics. The new rules made it too expensive for brokers to continue, and at the same time, they satisfied the big banks who wanted to eliminate a cheap competitor. Even the head of Germany's regulator, BaFin, now calls non-bank lending a "focus risk" for 2025.

Follow the Money: Who Profits?

The outcome is a massive transfer of wealth to banks. A broker like Interactive Brokers still offers cheap loans at around 3.4%, but you can't withdraw the money. If you need cash, you now have to go to a high-street bank.

In Portugal, banks like Credibom, Cetelem, and Novo Banco are now advertising personal loans with rates between 11.1% and 14.2%. Meanwhile, banks are borrowing from the European Central Bank at about 2.5%. The difference between what they pay and what they charge you is their profit, and it's the biggest it has been since 2008.

The Billion-Euro Cost to Savers

This has a huge cost. For an average €20,000 renovation, a Portuguese family now pays an extra €1,400 to €1,600 in interest every single year compared to 2021. Across Europe, experts estimate this change transfers €1 to €1.5 billion a year from the pockets of ordinary savers directly to the banking sector, all without a single public vote.

The CEOs of the brokers, like Frank Niehage of DEGIRO's parent company and Thomas Peterffy of Interactive Brokers, were left with no choice but to approve the new, restrictive terms. Undoing this would require a major political fight to create a special exception in the law, but for now, cheap, useful credit for savers is a thing of the past.