In a text adopted by the Internal Market and Consumer Protection Committee, with 42 votes in favour, 1 against and 1 abstentions, MEPs say that legislation should cover credit agreements of up to €150,000, with the actual upper limit to be determined by the relevant national authorities based on the particular economic situation in a member state. Member states will also be able to apply limited changes to the obligations in the case of small value loans of up to €200, loans granted interest-free and without other charges, or loans that have to be repaid within three months and with minor charges

Creditworthiness assessment

MEPs introduced further requirements to assess the creditworthiness of people taking out a loan before it is granted, including requiring information on a consumer’s current obligations or cost of living expenses. In order to assess the creditworthiness of consumers with little or no credit history, other information can be taken into consideration, such as from non-banking lenders, telecommunication providers and utilities.

However, data from social media and health data should not be taken into account and the right to be forgotten should be respected.

MEPs also agreed that The European Banking Authority (EBA) should develop guidelines detailing how creditors and providers of crowdfunding credit services perform this creditworthiness assessment.

Clear consumer information

Consumers should always obtain standard information so they can compare different offers, and understand the legal and financial consequences of loans and credit costs. The information should be shown upfront and in a clear way. Consumers should be able to see all essential information at a glance, even on their phone.

They should also be reminded that they have the right to withdraw from the credit agreement or the agreement for the provision of crowdfunding credit services without giving any reason within a period of 14 calendar days.

Consumer protection

MEPs stressed that credit advertising should contain, in all cases, a clear and prominent warning that borrowing money costs money, and that it should not incite over-indebted consumers to seek credit or suggest that success or social achievement can be acquired thanks to credit agreements.

As overdraft facilities and credit overrunning are increasingly common forms of consumer credit, MEPs want to regulate these financial products in order to increase the level of consumer protection and avoid over-indebtedness.

Next steps

Parliament negotiators are ready for talks with the Council and the Commission on the final shape of the rules, following plenary's green light.