The Consumer Credit Directive enters into force, which in two years will materialize the improvements on consumer protection
The Consumer Credit Directive has already been published in the Official Journal of the European Union. Throughout the process for the approval of this new standard, ASUFIN, through BEUC, has supported a wide and ambitious scope of application that allows solving the problems of EU citizens in accessing consumer loans.
The improvement in consumer protection implied by this new regulation involves, for example, loans of less than 200 euros, leasing contracts or buy now, pay later practices, an alternative to which more and more people resort to in order to stay on top of their bills, but in doing so increases the risk of insolvency and introduces consumers into a spiral of financial problems.
The improvement of this regulation is closely linked to the problem of growing over-indebtedness and of which ASUFIN has already repeatedly warned, since it introduces restrictions on loans in situations of insolvency, to avoid over-indebtedness in especially vulnerable consumers. Moreover, people with financial difficulties will be allowed to postpone payments and access debt counseling services.
From its publication in the Official Journal of the European Union (OJEU), member states will have two years (until 2025) to transfer this new framework to their national legal systems. In this process, each state will decide some crucial issues such as the limit on the cost of credit (to prevent excessive costs, imposing limits on costs), the prohibition of certain types of advertising, the possibilities of creating debt advisory services, etc.
There are two fundamental aspects that by not being included in the directive worries us: on the one hand, deferred debit cards and, on the other hand, peer to peer (P2P) loans, through crowdlending platforms where the consumer is even more unprotected than in the bank loan relationship. About the former, ASUFIN already filed a complaint with the Bank of Spain at the end of last year in relation to CaixaBank’s “MyCard” product, for understanding the deceptive practice that was taking place when inviting the change from one debit card to this one that turns out to be a product that leads to indebtedness.
When the time comes, we hope that the Spanish regulator addresses the need to address these products and that Spanish law also fully protects consumers and users against these products and practices since only then can we consider that the framework seeks a true determination to curb the evil of over-indebtedness of many people and households, accentuated by the bad practices of some financial actors.
