Consumer Credit Directive review: Needed change

Following the rise in digital lenders and increasing online distribution of consumer credit, the European Commission proposed a revision of the Consumer Credit Directive (CCD) in June 2021. The first European Consumer Credit Directive was implemented in 1987 and was replaced in 2008 with the current directive, which was designed to strengthen consumer rights, harmonise the set of rules on financial institutions, and allow consumers to make informed choices when signing a credit agreement.

The existing CCD has introduced a number of benefits for consumers, however, it is now somewhat outdated due to various technological and market developments since its adoption. The Commission’s proposal aims to address these developments and improve the regulatory framework for consumer credit by expanding its scope, introducing pricing rules, clarifying information requirements, and revising the creditworthiness assessment. Nevertheless, it remains a question as to whether the revisions are enough to create a well-functioning single-market for consumer credit. This policy brief assesses the proposed revisions.

Meryem Gökten is a Researcher in ECRI and the Financial Markets and Institutions Unit at CEPS.

Willem Pieter de Groen is ECRI Research Coordinator. He is also Senior Research Fellow and Head of the Financial Markets and Institutions Unit at CEPS.