Council and European Parliament agree to improve protection for consumers applying for credit

• Council of the EU
• Press release
• 2 December 2022
• 04:00

Council and European Parliament agree to improve protection for consumers applying for credit

The Council and the European Parliament reached a provisional agreement on consumer credit directive. The revised legislation repeals and replaces the current 2008 directive on consumer credit agreements.

The revision of the consumer credit directive modernises and enhances protection at European level for consumers applying for credit. It promotes responsible and transparent practices by all players involved in consumer credit, for example by ensuring that credit information is presented in a clear and understandable way, and is adapted to digital devices.

Consumer protection

The consumer credit directive will make sure that consumers can make an informed choice when applying for credit. Before signing a credit agreement, the lender must make sure that consumers have easy access to all necessary information and that they are informed about the total cost of the credit. On top of that, lenders must assess a consumer's creditworthiness, where they should assess if someone is able to repay their credit.

These consumer credit rules will ensure that consumers are protected from irresponsible lending practices that could lead to over-indebtedness.

Scope of the directive

An increased number of consumers applies for credit online. To keep up with the trend of digitalisation, the new credit rules will now also apply to certain risky loans that are excluded from the scope of the directive currently in force. This includes:

• loans below €200
• loans offered through crowd-lending platforms
• buy-now-pay-later products

Creditworthiness assessment

The new rules improve the creditworthiness assessment rules, by which the creditor assesses whether a consumer is able to repay its loan. When a creditworthiness assessment is negative, a creditor cannot make the credit available to the lender. This will protect consumers from receiving credit that they are not able to repay.

Background

Together with the review of the general product safety regulation, the consumer credit directive is part of the new consumer agenda, launched in 2020, aiming to update the overall strategic framework of EU consumer policy.

Next steps

The provisional agreement reached today is subject to approval by the Council and the European Parliament.

From the Council's side, the provisional political agreement is subject to approval by member states' representatives (in Coreper) before going through the formal steps of the adoption procedure.

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