Debate: Consumer credits
Date: MONDAY, 11 SEPTEMBER 2023
Speaker: Kadri Simson
Language: EN

The 2008 Consumer Credit Directive has proven to be an essential tool to protect EU consumers taking out credit. However, after 15 years, it was necessary to update it. Indeed, the digitalisation process profoundly changed the financial sector and new forms of credit are being proposed to vulnerable consumers online. The current cost of living crisis is also putting many European consumers under strain. Many need to borrow for their basic needs and we must ensure they are properly informed about the risks of taking out credit. In this context, the Commission welcomes the agreement reached by the co-legislators in spring and is very happy that the text is now ready for a formal final adoption by Parliament. The Commission believes that the new rules will improve the protection of consumers and will foster responsible practices both online and offline, thus increasing consumer confidence. They will also create a clearer framework for credit providers. I would like to thank you for the work done by Parliament and in particular by the rapporteur, Ms Kateřina Konečná, and the IMCO Committee on this very important proposal for consumer protection. We particularly welcome that the co-legislators found an agreement on several important improvements of the consumer credit legislation. Let me highlight a few of them. First, the scope will be extended to reflect market developments. New products such as ‘buy now, pay later’ schemes, as well as often risky small amount high-cost loans will now be covered by the rules. We also appreciate that pre-contractual information disclosure online will be improved. This will empower consumers to make more informed choices and effectively compare offers with online tools. Moreover, a warning about the costs of credit for all advertisements will increase consumer awareness. The Commission welcomes the further strengthening of the proposal regarding creditworthiness assessment – one of the key provisions of the directive. New rules will make sure that only relevant data are used for such assessment. Moreover, credit will only be granted to consumers who are deemed able to repay their debt sustainably. The new provisions on measures to cap the cost of credit on forbearance and on debt advice will prevent the offering of excessively expensive credits by design and strengthen over indebtedness prevention. They will ensure that consumers in difficulty are adequately supported and do not fall in debt spirals. The agreement also provides for effective and dissuasive penalties in line with horizontal consumer legislation. Finally, it is positive to see that the new directive establishes rules for adequate admission, registration and supervision of all credit providers. Once the text is adopted, the Commission will work closely with Member States to ensure a smooth transposition of the new rules. The Commission strongly believes the new directive is a major step forward to protect consumers against risky credit products and over indebtedness and to create a more harmonised framework for businesses offering credit. We are very proud of the results achieved.