European Council Adopts Position on Revised Consumer Credit Directive
The European Council adopted its position, or the general approach, on revision of the Consumer Credit Directive. The revised Directive will repeal and replace the 2008 Directive on consumer credit agreements.
The revised Directive aims to ensure a higher level of consumer protection in the granting of consumer credit and to promote the deepening of the internal market for such credit through a more harmonized legal framework at the European Union level. The Directive aims to promote responsible and transparent practices by all players involved in consumer credit by ensuring that credit information is presented in a clear and understandable way and is adapted to digital devices. The revised Directive also intends to protect consumers from irresponsible lending practices that could lead to over-indebtedness, promotes financial education and debt advice, and lays out stricter rules for assessing whether or not a consumer will be able to repay their credit.
The Council also proposed certain amendments related to the types of loan excluded from the scope, the optional partial derogation for four new products, the clarification of the provisions on pre-contractual information, and other changes. This proportionate regime also adapts pre-contractual information, advertising requirements, and early repayment provisions for credit loans of less than EUR 200, credit in the form of an overdraft facility that has to be repaid within three months, credit agreements free of interest and any other charges, and loan agreements with a maximum repayment term of three months and only insignificant charges. The Council proposed to exclude certain products from the scope, including direct crowdfunding, deferred payments and deferred debit cards, and rental or leasing contracts. With respect to other changes, the Council proposed to improve legal certainty and include clarifications on the creditworthiness assessment, the definition of a maximum time limit to exercise the right of withdrawal, the obligation to protect consumers from excessively high rates, clarifications on the admission procedures, and penalties. As a next step, the Council will have a mandate for further discussions with the European Parliament, as soon as the European Parliament adopts its position on the revised Consumer Credit Directive.
Keywords: Europe, EU, Banking, Credit Risk, Consumer Credit Directive, Lending, Consumer Lending, EC, European Council, European Parliament
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