COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE EVALUATION on Directive 2008/48/EC on credit agreement for consumers
Date: 2020-11-05
Institutions: Directorate-General for Justice and Consumers, European Commission
Subjects: EU Member State, application of EU law, consumer credit, consumer protection, contract, credit policy, single market

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   EUROPEAN COMMISSION  Brussels, 5.11.2020  SWD(2020) 255 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE EVALUATION  on Directive 2008/48/EC  on credit agreement for consumers    {COM(2020) 963 final} - {SEC(2020) 371 final} - {SWD(2020) 254 final}  
 
 
This  Staff  Working  Document  presents  the  main  findings  of  the  evaluation  of  Directive 
2008/48/EC  on  Credit  Agreements  for  Consumers  (‘the  Directive’).  The  Directive  aims  at 
achieving  two  main  objectives,  namely  to  improve  consumer  protection  and  to  foster  the 
emergence of a well-functioning internal market for consumer credit. It applies to consumer 
credit between EUR 200 and EUR 75,000, such as loans granted for personal  consumption, 
overdrafts and credit cards, but does not apply to some specific types of consumer credit (e.g. 
some interest-free credits, certain leasing agreements).  

The  evaluation,  launched  in  June  2018  in  response  to  the  2017  REFIT  Platform  opinion  on 
Article 4 of the Directive, examined in line with the EU Better Regulation rules whether the 
Directive has achieved its objectives and remains fit for purpose. It assessed the impact and 
the  achievements  of  the  Directive  on  the  performance  of  the  internal  market  for  consumer 
credit and on consumer protection across the EU. It draws conclusions for the future, taking 
also into account the developments since the adoption of the Directive in 2008.  

A study was contracted  from  an external  consultant  to  support the evaluation, including the 
legal  analysis,  literature  review,  targeted  stakeholder  consultations,  mystery  shopping  and  a 
quantification  exercise.  Other  consultation  activities  took  place  in  parallel:  ad  hoc  meetings 
with  Member  States,  with  industry  and  consumer  representatives,  and  with  the  Financial 
Services User Group, as well as an Open Public Consultation which ran between January and 
April  2019.  Moreover,  a  full-day  conference  on  “Protecting  consumers  taking  credit  in  the 
digital  era:  Can  we  do  better?”  was  organised  in  June  2019  on  the  interim  findings  of  the 
evaluation.  

The main results of the evaluation can be summarised as follows:  

-  The  Directive’s  objectives  of  ensuring  a  high  level  of  consumer  protection  and 
facilitating  the  emergence  of  a  well-functioning  internal  market  have  been  partially 
achieved. As regards the first objective, the introduction of the Directive has enabled the 
development  of  a  specific  legal  framework  to  protect  consumers  concluding  a  credit 
agreement,  which  is  key  to  ensure  consumer  confidence.  However,  several  Member 
States  have  complemented  the  Directive’s  provisions  with  additional  elements  in  the 
national  legislation.  Concerning  the  second  objective,  the  cross-border  market  for 
consumer credit has not increased since the application of the Directive and remains very 
limited.  The  Directive  played  a  positive  role  in  ensuring  a  level-playing  field  between 
providers,  but  stakeholders  agree  that  it  did  not  trigger  a  significant  rise  in  EU  level 
competition.  There  are  barriers  hampering  both  the  provision  and  the  purchasing  of 
financial  products  across  borders,  including  a  low  level  of  harmonisation  of  the 
regulatory framework.  The resulting fragmentation prevents  easy cross-border  access  to 
credit.  However,  consumer  interest  in  such  credit  options  seems  to  be  increasing  with 
digitalisation, which can foster awareness among consumers about credit offers available 
in other Member States. 

-  The Directive has worked particularly well in practice when it comes to its provisions on 
the  right  of  withdrawal  and  the  right  to  early  repayment.  The  evaluation  found  that  a 
majority  of  consumers  are  aware  of  both  rights,  with  the  right  of  withdrawal  far  less 
frequently  used  than  the  right  of  early  repayment.  A  recurring  issue  with  the  right  of 
withdrawal relates to a lack of clarity on its application to linked credit agreements. The 
provisions on the Annual Percentage Rate of Charge have also worked well, providing a 
coherent formula and a comprehensive comparison tool across all Member States. 

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-  Certain  shortcomings  prevent  the  Directive  from  addressing  all  of  the  current  and 
anticipated future needs  and challenges for  consumers and credit providers, particularly 
in  relation  to  issues  linked  to  digitalisation  and  responsible  lending.  For  instance,  the 
current scope of the Directive does not ensure consumer protection in relation to certain 
credit products falling below the threshold of EUR 200. Furthermore, new operators have 
emerged  (e.g.  non-banks,  peer-to-peer  lending  platforms)  and  new  products  have  been 
introduced  in  the  market  (e.g.  short-term  high-cost  loans),  especially  online,  leading  to 
new  challenges  for  effective  consumer  protection.  Some  of  these  new  products  induce 
consumers  to  take  unsuitable  financial  commitments,  which  more  often  lead  to  over-
indebtedness.  Many  Member  States  have  extended  the  scope  of  application  of  the 
Directive  to  consumer  credit  not  covered  by  it.  This  may  lead  to  increased  consumer 
protection  in  some  Member  States,  but  it  also  creates  a  differentiated  regulatory 
landscape across the EU. 

-  Vague  or  unclear  wording  of  certain  provisions,  together  with  different  approaches 
between  Member  States  in  areas  regulated  by  the  Directive  only  generically  (such  as 
creditworthiness assessment) have led to diverse application across Member States. This 
raises  concerns  notably  as  regards  the  use  of  alternative  data  in  the  creditworthiness 
assessment  and  as  regards  the  granting  of  loans  in  case  of  a  negative  creditworthiness 
assessment. In this aspect, the Directive’s provision on access to credit databases has had 
limited impact on fostering the emergence of a level playing field cross-border. The lack 
of  standardisation  in  the  data  to  be  collected  and  reported  limits  the  accessibility  of 
information about consumers across Member States’ borders. These elements hinder the 
effectiveness  of  the  creditworthiness  assessment  provisions,  especially  for  more 
vulnerable consumers and in the light of the expected increase in the digitalisation of the 
consumer credit market.  

-  Digitalisation  also  reveals  weaknesses  in  the  Directive’s  provisions  concerning 
advertising  and  pre-contractual  information  disclosure.  Although  the  Directive  has  in 
general  brought  beneficial  effects  regarding  the  provision  of  pre-contractual  and 
advertising information, there are several requirements that do not seem suited for digital 
devices, which are more and more used nowadays by consumers for searching and even 
concluding  credit contracts.  The amount and complexity of the information  provided in 
the  Standardized  European  Consumer  Credit  Information  (SECCI)  form  reduces  its 
effectiveness when accessed on small digital tools. 

-  On a cost-benefit analysis, the benefits of applying the Directive - especially in terms of 
reduction in consumer detriment - outweigh the costs. The evaluation clearly shows the 
continued  relevance  of  the  objective  to  achieve  higher  consumer  protection  standards. 
The  Directive  is  generally  coherent  and  complementary  with  other  EU-level  consumer 
policy  and  legislation.  The  evaluation  shows  a  clear  added  value  of  the  Directive, 
primarily  in  its  contribution  to  increasing  consumer  protection.  Some  room  for  further 
alignment  or  synergies  with  other  relevant  EU  pieces  of  legislation  was  identified.  For 
example, a greater alignment with the Mortgage Credit Directive might foster more legal 
clarity  and  ensure  a  consistent  approach  in  protecting  consumers  against  over-
indebtedness.  

In  conclusion,  this  evaluation  has  demonstrated  that  the  Consumer  Credit  Directive  is  still 
largely fit for purpose, but that further efforts are needed to harvest its full potential benefits 
for the promotion of the EU internal market for consumer credit and for effective consumer 
protection EU-wide. The limitations and shortcomings identified in the evaluation stem partly 
from the Directive itself (vague or insufficiently specific provisions; certain credits or parts of 

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the credit process not covered) and partly from the practical application of the Directive in the 
Member States and its enforcement. These evaluation results will feed into the review of the 
Directive,  which  was  included  among  the  REFIT  initiatives  of  the  Commission  Work 
Programme.  

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