The French Presidency of the EU Council has prepared a draft compromise to move forward on the proposed EU directive on consumer credit agreements in the digital age.
This legislation was introduced in June 2021 in order to adapt Directive 2008/48/EC to the changes in practices observed with the rise of digital technology, to ensure a high level of protection for consumers, who have been weakened by the Covid-19 crisis, and to guarantee harmonised conditions for credit companies (see EUROPE 12752/3). The risk of over-indebtedness has since been further exacerbated by inflation and soaring energy and food prices.
The draft compromise, dated 21 April, was presented to the EU Council’s Consumer Protection Working Party on 27 April.
The text, which has been seen by EUROPE, broadly supports the Commission’s proposal while clarifying it. The main changes at this stage concern the scope of application.
The Commission proposes that the Directive be extended to a range of products, including small, risky loans under €200, loans offered by crowdlending platforms (online financing that connects individuals) and ‘buy now and pay later’ products.
Rather than loans below €200, the text refers to ‘credit agreements’ below this amount.
And rather than referring to crowdfunding services (where a consumer seeks to take out credit through a crowdfunding credit service provider), the text targets digital crowdfunding platforms providing credit directly to consumers and considers that the provisions concerning lenders should apply to them.
Where crowdfunding credit platforms facilitate the granting of credit between creditors - whether or not they are acting in the course of their commercial, industrial or professional activity - and consumers, the obligations of creditors under the directive should apply to those creditors, according to the draft compromise. In such a situation, crowdfunding platforms act as credit intermediaries, so the obligations of credit intermediaries should apply to them, according to the text.
Credit agreements in the form of an overdraft facility, those that stipulate that the credit must be repaid within one month, and those where credit is granted without interest and without other charges, should also be covered.
According to the proposed compromise, credit agreements where the credit has to be repaid within three months and where only insignificant fees are due should also not be excluded from the scope.
However, the text specifies that, for all such credit agreements, Member States should nevertheless be able to exclude the application of a defined and limited number of provisions of the directive in order to adapt the obligations imposed on creditors to the nature and risks of the credit for the consumer, taking into account the specificities of the market and the different characteristics of such credits, while ensuring a higher level of consumer protection.
According to the compromise, deferred debit cards should be excluded from the scope, as they help households to better manage their monthly budget. Deferred payments authorised by these cards should be interest-free, only fees for the provision of the payment service should apply and the money should be refunded within 40 days.
Leasing contracts in which the obligation to purchase the subject matter of the contract is not provided for either in the contract itself or in a separate contract should also not be included in the scope, as they do not necessarily involve the purchase of goods or services.
For ‘buy now and pay later’ contracts, the text specifies that they should be distinguished from deferred payment of bills (granted by a supplier to the consumer), which is not covered by the directive.
See the text: https://aeur.eu/f/1e9 (Original version in French by Aminata Niang)