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S&Ds: Rules for credit must minimise risk of over-indebtedness for EU consumers

Date

12 Jul 2022

Sections

Euro & Finance

The Socialists and Democrats in the European Parliament voted in favour of texts that significantly improved the new Consumer Credit Directive (CCD) in the interests of citizens and especially the most vulnerable. This happened during a vote on the legislative text proposed by the European Commission in the European Parliament’s committee on the internal market and consumer protection. The credit sector is flourishing in these times of economic crisis and uncertainty, but according to the S&D Group this puts consumers at great risk, especially with so-called “interest-free credit”. Thanks to our group, it will be no longer possible for creditors to use sensitive data or data collected from social networks.

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

“The new EU rules we voted today in the parliamentary committee come to update the existing rules that date back to 2008. We have to put an end to the lack of regulation of newer products like "buy now - pay later" credit, which proved to be very dangerous for consumers. It is very important to our group that the rules are adequate for the realities of our digital age and that personal data from consumers using digital technologies are protected.

“Credit can have a positive role for the lives of individuals and families, but they need to be adequately regulated to ensure they are provided in the best interests of the consumers and only to those with the ability to pay them back. Thus, we fought for the inclusion of every credit and credit-like product in the scope of this directive, ensuring that what tastes and smells like credit is regulated as credit. It is sad to see how our colleagues from the right-wing of the European Parliament underestimate the human tragedy that can result from unregulated credit, instead seeing this financial option just as business opportunities that should be left unregulated.

“As an S&D negotiator on the file it was particularly important to me to include the creditworthiness assessment obligations, as it is essential to avoid the creation of eternal debtors who can never pay back their debts. This assessment must be carried out in the interests of the consumer and ensure realistic repayment plans tailored to consumers’ capacities for repayment. Our group also voted in favour of introducing caps on interest rates, ensuring that consumers are adequately informed before taking out credit and ensuring stricter rules for the advertisement of credit, to protect the most vulnerable.”

Following its adoption at parliamentary committee level today, the Consumer Credit Directive now goes to negotiations between the European Parliament and the Member States in the Council of the EU, with the intermediary of the European Commission. If a deal is reached between the EU institutions, a vote on it in the plenary of the European Parliament is expected at the end of this year.

 

 

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