On 30 June, the European Commission published a proposal for a Directive on Consumer Credits, extending and updating consumer credit rules across the EU. The proposal repeals and replaces the 2008 Consumer Credit Directive (2008/48/EC). This review, stemming from the evaluation of the current rules and new developments brought by the COVID-19 crisis, aims at extending and updating consumer credit rules in the EU.
The topic of consumer credit has become increasingly relevant in the e-commerce sector as new players and evolving consumer demand for these solutions continue to shape the sector. The proposed new rules, and particularly changes to the scope of the existing directive, will therefore have an impact on the sector.
The revised rules aim to broaden the scope of products that will have to comply with stricter lending obligations, provide new ways of disclosing information digitally and improve rules that assess the creditworthiness of consumers. For instance, buy-now-pay-later products, small loans below €200 and credit agreements up to €100,000 would be subjected to compliance obligations. Furthermore, the new provisions would include additional type of credit agreements such as loans offered through crowd-lending platforms (online financing that connects people willing to loan money to others), credit agreements with a three-month credit repayment requirement and insignificant payable charges, overdraft facilities with a one-month credit repayment requirement and leasing agreements.
In addition, the Directive wants to strengthen the rules with which creditworthiness of consumers is assessed to tackle the risk of over-indebtedness. To improve consumers’ financial literacy, Member States would be required to promote financial education (e.g. on products sold digitally) and to ensure debt advice is made available to consumers. The proposal also includes a ban on tying practices and unsolicited sale of credit and forbids the use of pre-ticked boxes while it aims to encourage the fixing caps on interest rates (already present in several EU countries).
The proposal is now under discussion and scrutiny in the European Parliament and in the Council of the EU and it is expected to enter into force by 2024.
Contact us to learn more about Ecommerce Europe’s position on consumer credit.