Consumer finance regulatory news, 5 July 2021

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• CCD: European Commission adopts proposed Directive on consumer credits

CCD: European Commission adopts proposed Directive on consumer credits

The European Commission has adopted a proposed Directive on consumer credits to revise and replace the Consumer Credit Directive (CCD). The Commission has also published on its webpage on the review of the rules relating to consumer credit agreements, the Annexes to the proposed Directive, an impact assessment report, an executive summary of the impact assessment report, a Regulatory Scrutiny Board Opinion on the impact assessment and a factsheet.

The Commission explains that, in the light of market, technological and behavioural developments since the adoption of the CCD, consumers taking out loans face detriment that could be avoided. Moreover, businesses face burdens and costs from unclear obligations, lowering the competitiveness in the EU market for consumer credit.

The proposed revisions to the CCD include:

• extending its scope to cover loans of less than EUR200, interest-free credit, all overdraft facilities and all leasing arrangements, as well as credit agreements concluded through P2P lending platforms;
• making information related to credit offers clearer, and reducing the amount of information to be provided to consumers in advertising using certain channels;
• banning practices that exploit consumer behaviour, such as pre-ticked boxes, tying practices and unsolicited sales, and setting caps on interest rates, the annual percentage rate of charge or the total cost of credit; and
• improving rules on assessing consumer creditworthiness to make sure appropriate and proportionate data is used and to prevent over-indebtedness.

The European Parliament and the Council of the EU will now consider the proposed Directive.

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Authored by Yvonne Clapham