Client safety: The Council adopts a place on new guidelines on shopper credit score

The Council today adopted its position (“general approach”) for revision the Consumer Credit Directive. The revised directive repeals and replaces the current 2008 directive on consumer credit agreements.

Since 2008, increase digitization European economy has led to significant changes in the consumer credit market. This has led to the emergence of new products and the emergence of new players who offer credit through faster and simplified procedures, as well as changes in the preferences of consumers who are increasingly shopping online, especially after the recent COVID-19 crisis.

The revision of the Consumer Credit Directive accordingly modernizes a strengthens consumer protection at European level when subscribing to such a credit. In particular, it aims to promote responsible and transparent consumer lending practices, for example by guaranteeing them credit information are presented in a way clear a understandableand are customized digital devices.

In addition, in order to protect consumers from irresponsible credit practices that may lead to over-indebtedness, the Directive supports financial education a debt counseling and tightens up the assessment of consumers’ ability to repay credit.

Types of loans excluded from the scope

The Commission’s proposal significantly expands the range of products that will have to comply with stricter credit rules, including, for example, credits below € 200, credits offered by crowdfunding platforms and “Buy Now, Pay Later” products.

However, the Council’s mandate proposes this exclude whereas the framework of the Directive is not appropriate for them. It therefore excludes direct crowdfundingwhereas the provisions do not cover all aspects of this type of financing, in particular the protection of consumer creditors. It also precludes under certain conditions, deferred payment as well as deferred debit cards which are more responsive to payment habits. Contracts of rent or from leasing which are not accompanied by an option or obligation to purchase the property are, according to the text of the board, also excluded.

Optional partial waiver

For certain credit products that are newly covered by the scope of the Directive and are considered less risky, the Council mandate proposes and partial forgiveness optional for certain provisions. This appropriate regime thus makes it possible to adapt pre-contractual information, advertising requirements and early repayment provisions to the following products:

  • credits of less than EUR 200
  • repay the loan provided in the form of an overdraft (ie borrowing more than one) within three months
  • interest-free and no additional credit agreements
  • credit agreements with a maximum duration of three months and negligible fees

Clearer information before signing the contract

In order to enable consumers compare rapid credit offers, the Council mandate proposes to merge the pre-contractual information forms to be provided to consumers. In addition, to make it easier to read, the text requires that it be indicated essential information on the first page.

Other changes

The other changes made by the Council are intended to provide increased legal certainty and include clarifications regarding the assessment of creditworthiness, the definition of a maximum period for exercising the right of withdrawal, the obligation to protect consumers from excessive rates, clarification of acceptance procedures and sanctions.

context

Together with the revision of the General Product Safety Regulation, the Consumer Credit Directive is part of a new consumer agenda, launched in 2020, which aims to update the overall framework of EU consumer policy.

Next steps

The general approach adopted today complements the negotiating position adopted by the Council. It gives the Council Presidency a mandate to continue discussions with the European Parliament as soon as the European Parliament adopts its position.

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