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    EC Proposes Revisions to Consumer Credit Directive

    June 30, 2021

    EC is proposing revisions to the Consumer Credit Directive (2008/48/EC). The Directive has facilitated the establishment of a harmonized EU framework and provided a solid framework for fair access to credit for European consumers. However, since its entry into force in 2008, digitalization has profoundly changed the decision-making process and consumer habits. The proposed revisions aim to address these developments and provide that information related to credits must be presented in a clearly and adapted to digital devices so that consumers understand what they are signing up for. Furthermore, the proposed Directive will improve rules related to creditworthiness assessment process. The proposal will now be discussed by the European Council and Parliament.

    The proposed Directive lays down a common framework for harmonization of certain aspects of the laws, regulations, and administrative provisions of the member states concerning consumer credits in the form of certain credit agreements for consumers and crowdfunding credit services for consumers. The proposal will repeal and replace the Directive 2008/48/EC. The factsheet, published along with the proposed directive, highlights that EC is revising the existing EU rules on consumer credit to:

    • Include risky loans currently not in scope of the EU regulation on consumer credit
    • Adapt information requirements to make sure they cater for digital devices
    • Make information related to credit offers more clear and avoid information overload for consumers
    • Address practices that exploit consumer behavior such as product tying, pre-ticked boxes or unsolicited credit sales
    • Improve rules on the assessment of consumer creditworthiness—that is, their ability to repay the credit in a sustainable way, to make sure appropriate and proportionate data is used and to prevent over-indebtedness
    • Cap the cost of the credit for consumers
    • Support consumers who experience financial difficulties through forbearance measures and debt advice services
    • Introduce requirements for businesses to put consumers’ needs first and act ethically while ensuring that their staff have an appropriate knowledge and competence on credit

     

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    Keywords: Europe, EU, Banking, Credit Assessment, Consumer Credit, Loan Origination, Credit Risk, Lending, EC

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