The Council and the European Parliament reached a provisional agreement on the credit directive to better protect consumers when applying for online credit.
The revised legislation replaces the current 2008 directive on consumer credit agreements. This agreement will ensure that individuals have “sufficient and clear information” about their credit agreements.
The consumer credit directive will ensure that consumers can make a choice when applying for credit. Before signing the agreement, the lender must make sure that consumers have easy access to all necessary information and that they are informed about the total cost of the credit.
Furthermore, lenders must assess a consumer’s creditworthiness, where they should assess if someone is able to repay their credit. These consumer credit rules will protect consumers from irresponsible lending practices that could lead to “over-indebtedness”.
Jozef Síkela, Czech Minister for Industry and Trade, commented: “The revision of the consumer credit directive modernises and enhances protection at European level for consumers applying for credit.
“It promotes responsible and transparent practices by all players involved in consumer credit, for example by ensuring that credit information is presented in a clear and understandable way, and is adapted to digital devices.”
To keep up with the trend of digitalisation, the new credit rules will now also apply to certain risky loans that are excluded from the scope of the directive currently in force. This includes loans below €200, loans offered through crowd-lending platforms, and buy-now-pay-later products.
The new rules improve the creditworthiness assessment rules, by which the creditor assesses whether a consumer is able to repay its loan. When a creditworthiness assessment is negative, a creditor cannot make the credit available to the consumer. This will further protect consumers from receiving credit that they are not able to repay.
The provisional agreement is subject to approval by the Council and the European Parliament.
