European Parliament votes on revised Consumer Credit Directive
The extended scope of the newly adopted proposal subscribes to the principle of same activity, same risk, same rules, ensuring that all entities engaged in offering professional consumer finance services should be subject to relevant and proportionate registration and supervisory arrangement. In addressing new types of services such as Buy Now Pay Later and new market entrants such as fintechs, the legislators have solidified consumer protection with regards to financial services overall.
Eurofinas also welcomes the application of a proportionate approach, e.g. with regards to Credit Worthiness Assessments and the requirement that the assessment is “proportionate to the nature, duration, value, and risks of the credit for the consumer”, in addition to avoiding overly prescriptive requirements beyond the ban on the use of social media data.
While the updated rules aim to respond to the current market reality with a greater reliance on digital distribution channels, provisions on advertising and information requirements remain unsuited when hoping to answer consumer expectations in terms of their customer journey and the products/services offered. At the same time, it does little to address the well-established issue of information overload that consumers face.
Eurofinas President, Bart Vervenne, has stated that “The Consumer Credit Directive is one of the most important pieces of legislation for consumers in the field of financial services, governing activities that are crucial for consumers´ financial well-being, and, ultimately, the broader economy. The industry welcomes the conclusion of the legislative process and the updated framework which provides a high and common level of consumer protection and a level playing field. It is now essential that implementation at national level avoids steps that cause divergence and “goldplating”, providing for a more harmonised and commonly respected framework across Europe. Eurofinas and its Members will continue to closely monitor transposition of the legislative framework.”