DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL ON CONSUMER CREDIT (10/18/2023)

[New Consumer Credit Directive]

Summary

The new Consumer Credit Directive revises Directive 2008/48/EC on consumer credit agreements. The new Consumer Credit Directive takes over many of the solutions currently in place, while introducing new regulations designed to respond to the digital transformation that has moved many of the processes involved in obtaining credit on-line.

Impact

The new Consumer Credit Directive will cover loans and credits that were previously outside the scope of Directive 2008/48/EC, including, among other things, interest-free loans. The provision of community lending services was also regulated and made subject to requirements analogous to consumer lending. The new Consumer Credit Directive involves reducing the amount of advertising information transmitted to consumers and provides more detail on how and when the pre-contractual information is delivered to consumers.

The new Consumer Credit Directive will require Member States to set interest rate caps, annual percentage rate or total credit cost. The draft would also require lenders and credit brokers to ensure that staff members have an appropriate set of skills and knowledge. The requirements for conducting credit assessment and using alternative data sources for this purpose have also been significantly expanded.

The new Consumer Credit Directive also requires Member States to subject lenders to appropriate procedures for authorization to conduct business as well as registration and supervision mechanisms established by an independent competent authority.

Transposition

Member States should adopt and publish legislation implementing the new Consumer Credit Directive by 11/20/2025 and start applying it from 11/20/2026.