Consumer Credit Directive (CCD)
Among BIPAR members, certain national associations represent credit intermediaries. The Consumer Credit Directive contains rules applicable to credit intermediaries. Over the past years, BIPAR, together with its Working Party on Credit, has been working on the Commission’s review proposal for the CCD (proposal published on 1st July 2021). The Commission’s main drivers for the proposed changes were digitalisation, recent other newer EU legislation in fields relevant for consumer credit, Covid-19 and over-indebtedness.
After having adopted their respective positions on the CCD review in the course of 2022, in December 2022, the European Parliament and Council reached provisional agreement in trilogue. In April 2023, the Council’s Committee of Permanent Representatives (COREPER) adopted the trilogue text on the CCD. The Parliament’s IMCO committee adopted the text on 23 May 2023. The indicative Plenary vote is 9 September 2023.
BIPAR's position on the initial Commission’s proposal focused on the following points:
- credit intermediation and a level playing field (remuneration, advice, ancillary intermediation, etc.);
- caps on interest rates, annual percentage rate of charge or total cost of credit to the consumer;
- overload of precontractual/general information;
- access to credit databases;
- additional proportionality for micro and SMEs.
Key points for BIPAR in the final text as agreed upon in trilogue include:
- in the definition of credit intermediary the neutral word “remuneration” is used instead of “fee”;
- the proposal of the EP to limit the use of the words “advice” and “advisor” and the de facto ban on commission for independent advice are not in the final text anymore;
- there is no additional piece of precontractual information (SECCO);
- there are no EU-wide caps on rates/costs, but MS should take measures to limit these and communicate these to the Commission;
- however, the rules on cross-selling are softer in the trilogue text than the wording that BIPAR called for and the additional application time of the new rules to micro/SMEs does not figure in the text.
The text still has to be approved by the EP plenary and also the formal adoption still has to take place in the Council. After that, the CCD will be published in the Official Journal, which triggers the implementation and application of the new Directive.
Directive on credit agreements for consumers relating to residential immovable property (MCD)
The Directive on credit agreements for consumers relating to residential immovable property (“Mortgage Credit Directive” or “MCD”) has applied since 21 March 2016. It aims to improve consumer protection measures across the EU and establishes principles for the authorisation and registration of credit intermediaries. BIPAR and its working party on credit represented intermediaries’ views during the preparatory phase of the Directive until its adoption, as well as during Levels 2 and 3 proceedings.
More recently, BIPAR has been involved in the review process of the Directive. In May 2021, the European Commission published a report on the review of the MCD, together with a short annex on the role of credit intermediaries in mortgage lending.
State of play
The Commission organised a public consultation on the review, to which BIPAR, together with its Working Party on Credit, responded in February 2022, including questions on information to consumers/digitalisation, on green mortgages, on tying and bundling and on credit intermediaries (their passporting right under the MCD and their (non) use of it).
In the late summer of 2022, BIPAR was contacted by a consultant (on behalf of the European Commission’s DG FISMA) to take part in a survey on the impacts of a possible revision of the MCD. The consultant is preparing a study for the Commission to support their evaluation and impact assessment of the MCD. The purpose of the study is to collect and analyse data and other evidence and on that basis to present findings and conclusions to support the formal evaluation and impact assessment accompanying a possible proposal for the MCD revision. BIPAR and its experts also took part in an interview with the consultant and in a validation workshop. The study is not public yet. The report is still being finalised by DG FISMA and it is to be seen if/when it will be published.
On 23 June 2022, the European Banking Authority (EBA) published an advice to the European Commission on the review of the MCD, proposing to revise it. EBA identified some specific issues to be addressed, such as:
- the scope of MCD, including tying/bundling practices where EBA finds that the rules should be changed / strengthened for instance “by requiring creditors to inform their customers that they are free to choose from any insurance provider and are not obliged to take out any required insurance policy with them. EBA continues that should the EC decide to amend the text of the MCD in respect of tying/bundling practices, EBA strongly proposes that the resultant provisions and definitions are aligned with corresponding provisions and definitions in other sectoral legislations, and not only with legislation within the banking but also the insurance and investment sectors, because much cross-selling occurs with products from across the three financial sectors. The EC should also take into account different conclusions drawn by other authorities competent in the different sectors”);
- information disclosure (simplification, better presentation etc) and robo advice;
- ways to facilitate the cross-border provision for mortgages – for example, to set up a single EBA register for credit intermediaries;
- sustainability (for example, to establish an EU-wide definition of ‘green mortgages’ to encourage sustainable lending and borrowing) and properties at risk due to climate change;
- to clarify whether credit intermediaries are capable to hold funds from borrowers in order to transfer them to the creditors and, if so, whether this activity would be excluded or not from PSD2.
BIPAR's positions/key messages
- BIPAR stressed, amongst others, that the MCD is still relevant, but that the administrative burden needs to be tackled in a review (for example, the ESIS could be simplified and made more concise) and that the issue of cross-selling should be reviewed, as there are still cases where de facto consumers are bound to an insurance for the same duration as their mortgage loan.
- BIPAR also called for more study with regard to the so-called “robo advice”.
- Regarding credit intermediaries’ European Passport, BIPAR stressed that for this to work in practice, it is important that as much legal clarity and certainty as possible is given to business. Clarity and consistency in the content of the information to be notified by credit intermediaries wanting to operate cross border has been ensured by the EBA guidelines, but there is even a bigger need for legal clarity regarding the triggering element regarding FOS and FOE activities of credit intermediaries.
The indicative planning for the Commission’s action is currently in the first quarter of 2024.