30 June 2021

European Commission: New proposal for a Directive on consumer credits repealing and replacing the Consumer Credit Directive (2008/48/EC)

A REFIT Evaluation2in 2018-2019 found thatthe 2008 Directive’s objectives.. are still relevant in the context of a regulatory landscape that is significantly fragmented across the EU and have been only partially met.

Reasons for and objectives of the proposalDirective 2008/48/EC on credit agreements for consumers

(‘the Consumer Credit Directive’ or ‘the Directive’), amended in 2011, 2014, 2016 and 20191, established a harmonised EU framework for consumer credit, to facilitate the emergence of a smoothly functioning internal market in consumer credit and provide a high level of consumer protection in order to ensure consumer confidence.

A REFIT Evaluation2in 2018-2019 found thatthe 2008 Directive’s objectives, namely ensuring high standards of consumer protection and fostering the development of an internal market for credit, are still relevant in the context of a regulatory landscape that is significantly fragmented across the EU and have been only partially met.

Such fragmentation, together with legal uncertainty due to the imprecise wording of some provisions of the Directive, hamper the smooth functioning of the internal market for consumer credit and does not guarantee a consistently high level of consumer protection.Since the adoption of the 2008 Directive, digitalisation has profoundly changed the decision-making process and the habits of consumers in general, who now want a smoother and faster process for obtaining credit and often do so online.

This also affects the lending sector, progressively getting digitalised. New market players, such as peer-to-peer lending platforms, are offering credit agreements in different forms. New products, such as short-term high-cost credit, have appeared. Digitalisation has also brought new ways of disclosing information digitally and assessing the creditworthiness of consumers using automated decision-making systems and non-traditional data.

The COVID-19 crisis and the resulting confinement measures have also disrupted the EU economy and had a major impact on the credit market and consumers, especially vulnerable ones, making many EU households more financially vulnerable. Conversely, the crisis has also accelerated the digital transformation. Amid the COVID-19 crisis, Member States adopted a series of relief measures that seek to alleviate the financial burden of citizens and households, such as loan repayment moratoria that were generally extended to consumer credit.

Against this background, the Commission announced a review of the Consumer Credit Directive in its Work Programme for 2020. In the revised Work Programme adopted in the context of the COVID-19 pandemic the adoption date of the review was postponed to the second quarter of 2021...

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