Consumer Credit Directive (CCD) - Evaluation by the European Commission

Background

The Consumer Credit Directive (CCD) was adopted on 23 April 2008 and Member States had to transpose it into national law before 12 May 2010. The CCD aims at fostering the integration of the consumer credit market in the EU and ensuring a high level of consumer protection by focusing on transparency and consumer rights. The Directive applies to credit above €200 and below €75,000. The Directive regulates certain obligations of credit intermediaries in relation to consumers. It stipulates that a comprehensible set of information should be given to consumers in good time, before the contract is concluded and also as part of the credit agreement. This includes pre-contractual “Standard European Consumer Credit Information” and the “Annual Percentage Rate of Charge”. The CCD allows consumers to withdraw from the credit agreement without giving any reason within a period of 14 days after the conclusion of the contract and they have the possibility to repay their credit early at any time.

The Commission’s CCD implementation report and the REFIT platform opinion on CCD both pointed out certain shortcomings of the Directive. The Commission’s Consumer Financial Services Action Plan: “Better Products, More Choice”, also called to further explore ways of facilitating cross-border access to consumer credit.

Additionally, the Commission noted that since 2008, the market has significantly evolved and several other EU pieces of legislation were adopted in different fields also relevant for the provision of consumer credit, such as mortgages, data protection, anti-money laundering and payment services. Against this background, the Commission decided to carry out an evaluation of the CCD, in line with its “Better Regulation” principles. The evaluation is looking at, amongst others, the distribution phases, cross-selling and information disclosure.

In 2018, the Commission consulted on a Roadmap regarding this evaluation and in 2019 the Commission consulted stakeholders to express their views on the functioning of the CCD. BIPAR responded to both consultations. In its input, BIPAR recalled that the presence of credit intermediaries always represents an additional guarantee of consumer protection through professional services and advice.

BIPAR also provided comments on points where change of the CCD would be beneficial (single licence for intermediaries, cross-selling,…) and where no change is needed (scope of the CCD, remuneration – adding that in any discussions concerning remuneration of intermediaries, a level playing field between credit intermediaries and direct lenders/other distributors has to be guaranteed).

In its work programme for 2020, the Commission states that “the ongoing evaluation of the directive will focus on the progress made, its costs and benefits. It will also focus on whether original objectives and tools of the Directive correspond to current needs, on monitoring how the Directive works together with other pieces of legislation and whether the EU intervention has delivered a benefit”.

Based on the outcome of the evaluation, the Commission’s review is intended to ensure better consumer information and understanding of consumer credits, taking into account the digitalisation in the provision of such products. It will aim at providing better protection for consumers from irresponsible lending practices, particularly those spread online.

Next steps

The Commission indicates in its 2020 work programme that legislative measures are to be expected for Q2 2021. In the context of the Covid-19 crisis, the European Commission indicated that it will also look again into over indebtedness, the responsibility of creditors and the possible need for stricter rules re. advertising of credit in this respect.


- Published in June 2020 -

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