The EU Council and European Parliament are making progress on the June 2021 proposal for a directive on consumer credit agreements, which aims to adapt Directive 2008/48/EC to the digital age, ensure better consumer protection and guarantee harmonised conditions for credit businesses (see EUROPE 12752/3).
A draft compromise from the French Presidency of the Council of the European Union - the second (see EUROPE 12941/17) - was submitted to the EU27 experts on 17 May. It strengthens the provisions relating to the advertising of credit agreements, to the pre-contractual information to be provided to the consumer and to the assessment of the consumer’s creditworthiness to prevent over-indebtedness.
Pre-contractual information. According to the compromise, this information will have to be provided in good time before the conclusion of the credit agreement, ensuring that the consumer has sufficient time to read and understand the pre-contractual information and make an informed decision. It will also have to be prominently presented on the first page of the Standard European Consumer Credit Information form.
Assessment of creditworthiness. The text specifies that this assessment must be based on information relating to the consumer’s financial and economic situation, “which is necessary and proportionate to the nature, the size, the complexity and the risks of the credit for the consumer”.
The lender will need to take into account relevant factors and specific circumstances, for example in the case of loans to finance studies or to cover exceptional health care expenses, the existence of sufficient evidence that such loans will bring the consumer future income, or the existence of collaterals or other forms of guarantees that the consumer could bring to secure the loan.
Advertising of credit agreements. The draft compromise states that the total amount of credit and the repayment period chosen by the lender for its representative example should correspond, as far as possible, to the characteristics of the credit agreement advertised by the lender. The standard information should also be clearly distinguished from any additional information on the credit agreement.
Furthermore, while the unsolicited granting of credit should be prohibited, the text specifies that this does not prevent lenders and credit intermediaries from advertising or offering credit in the context of a commercial relationship.
Ongoing European Parliament negotiations. In the European Parliament, negotiations are underway between political groups to reach compromises on the report by Kateřina Konečná (The Left, Czech Republic).
The MEP proposes to extend the scope to hiring and leasing contracts, including leasing agreements without a purchase option, as well as to credit services that may be developed in the future, and to revise the directive in 2024 with a particular focus on “peer-to-peer” crowdfunding lending.
She also proposes to ban all personalised advertising on credit products and to allow only standardised offers.
Regarding pre-contractual information, in order to make the information as comprehensible as possible and to avoid drowning the consumer in too much detail, she proposes to add information on payment defaults and the right of withdrawal in the Standard European Consumer Credit Information form rather than creating a new one.
As for the assessment of creditworthiness, Konečná wants it to be limited to strictly necessary financial data, with a ban on using data on the consumer’s health or the medical history of a person with cancer.
Council Presidency draft compromise: https://aeur.eu/f/1r0
Draft ‘Konečná report’ to the European Parliament: https://aeur.eu/f/1r5 (Original version in French by Aminata Niang)