Consumer credit: new obligations for providers and new rights for consumers
In October, the EU directive on credit agreements for consumers entered into force, replacing the previous directive from 2008. The need for new consumer credit legislation arose due to rapid technological developments and the ongoing digitisation of financial services.
New technologies and innovative practices have brought new forms of consumer credits, such as deferred payments and crowdfunding services. The new regulation should also raise the standard of consumer protection, by regulating advertising, and by introducing an information obligation for creditors and rules on the assessment of a consumer’s creditworthiness by creditors.
The directive applies only to certain consumer credit agreements and crowdfunding services.
However, compared to the previous directive, its scope is significantly wider, as it will also apply to
consumer credits of less than EUR 200, lease contracts with an option to buy goods or services, overdraft facilities, and interest-free loans with no fees or loans with a maturity of up to three months with negligible fees (deferred payments).
The new directive also sets out more detailed requirements for assessing a consumer's creditworthiness. In particular, creditors should make such an assessment considering a consumer’s interest, all necessary and reasonable information on the consumer's income and expenditure and, where appropriate, the consumer's other financial and economic circumstances. The assessment must result in the conclusion that the obligations under the credit agreement (or the crowdfunding services agreement) are likely to be met in the manner envisaged by the agreement. The directive also introduces a consumer’s right to request human intervention and an explanation from the creditor whenever the creditworthiness assessment involves automated processing.
The directive also explicitly prohibits certain types of services. These are tying practices (i.e., the selling of a credit agreement in a package with other distinct financial products or services), any unsolicited granting of credit, and any inferred agreements: creditors thus may not imply that the consumer has consented to entering into a credit agreement or to purchasing any additional services presented by means of pre-set options.
The directive also deals with financial awareness, as it obligates EU member states to promote measures to encourage consumer education in responsible borrowing and debt management. The directive also introduces new leniency measures, whereby EU member states should require creditors to apply certain measures before proceeding with debt recovery – e.g., extending the repayment period, changing the type of loan, or reducing the interest rate.
Once we know the specific form of the national law transposing the directive, we will inform you about the new rules. The directive sets the deadline for national implementation for November 2026.