On 8 April 2019, Finance Watch responded to a public consultation of the European Commission that aims to gather views of all relevant stakeholders on the functioning of the 2008 Consumer Credit Directive (CCD).
The European Commission was looking for feedback, amongst others, on the developments of the consumer credit market since 2008, on the importance of the different provisions of the directive such as its scope, pre-contractual obligations and creditworthiness assessments, its subsequent costs and benefits as well as on the issues that the directive has not addressed.
In its response, Finance Watch highlights the importance
- to enlarge the scope of the Directive to all credit used by consumers without exception;
- to ensure that the obligatory creditworthiness assessment is effective, operational and proportionate by requiring an adequate personal budget analysis (income and expenditures) that includes all on-going credit and debts and should lead to an offer adjusted (in amount and in duration) to the needs of the borrower or to a refusal when the financial capacity is not sufficient;
- to prohibit exploitative terms and conditions based on explicit common principles of the nature of detriment consumers should be protected from, for example very costly short-term credit (e.g. pay-day loans) offered to consumers who are trapped in a vicious circle because of their unbalanced budget