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New credit market law will better protect consumers, thanks to S&Ds


12 Sep 2023


Global Europe

Today, the European Parliament gave its greenlight to improve the new Consumer Credit Directive*, aiming to reinforce consumers’ rights and to help them make an informed choice when signing to a credit agreement.

Credits can definitely have a positive role in the lives of individuals and families, but they need to be adequately regulated to ensure they are provided in the best interests of consumers, and especially the most vulnerable ones.

Thanks to the S&Ds, the scope of the proposal has been preserved and it will no longer be possible for creditors to use sensitive data or data collected from social networks when carrying out ‘Creditworthiness assessment obligations’. Our group also managed to prohibit the advertising of credit targeted at over indebted consumers.

Maria Manuel Leitão Marques MEP, S&D shadow rapporteur on the Consumer Credit Directive, said:

“With this legislation we want to make sure that recent developments on the credit market are taken into account, including digitalisation, new actors such as crowdfunding services, or new products like ‘Buy Now Pay Later’. The proposal will now cover credits lower than €200 and up to €100 000, and target all actors offering credits including new forms of so-called ‘interest-free credit’.

“As S&Ds, our key objective is to protect consumers, and especially the most vulnerable ones, by reducing to the maximum their risk of over-indebtedness. Sometimes this happens due to the accumulation of several small credits, which become a big burden. Despite the EPP’s strong insistence, we managed to maintain ‘Buy Now Pay Later’ and small-value credits within the scope and make them subject to the obligations under the Directive. ‘Buy Now Pay Later’ credits are dangerous for consumers due to heavy late payments fees and a lack of creditworthiness assessment.

“We are proud to have included a prohibition of certain advertising practices in the legislation. This includes adverts that incite over-indebted consumers to seek credit, suggest that outstanding credit contracts have little or no influence on the assessment of a credit application, and adverts that falsely claim that credit can raise a consumer’s living standards.

“It is crucial to protect consumers, not only when singing the credit agreement, but also throughout the whole duration of the credit. This is why the S&D Group ensured that the ‘Creditworthiness assessment obligations’ takes into account the nature, duration and value of the credit, and also the obligation to re-assess the consumer’s creditworthiness before any increase of the amount of the credit. We also clarified that sensitive data or data collected from social networks cannot be processed during the assessment."

*The new Consumer Credit Directive revises the existing Directive from 2008.


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