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Dealing with exploitative consumer credit

Retail & financial inclusion

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Finance Watch releases new research paper “What makes credit so risky? A consumer perspective”

Brussels, 26 June 2019 – Finance Watch, the public interest NGO, today released a new research paper on consumer credit and its contribution to over-indebtedness. The paper explores how societies have responded to exploitative lending practices through history and looks at how toxic products are dealt with in some other industries.

The report comes as the European Commission evaluates the Consumer Credit Directive 2008 and whether to launch a review in 2020.

Olivier Jérusalmy, Senior Research and Advocacy Officer at Finance Watch and author of the paper, said:

“The sad truth is that lending can be much more profitable when the client is over-indebted: indeed, some loans are designed to trap vulnerable users in a toxic cycle of never-ending debt, for example with payday loans and some revolving credit and unarranged overdrafts.

“The EU protects its citizens from chemicals and pharmaceutical substances with toxic characteristics, we think it should do the same for toxic consumer credit.”

Benoît Lallemand, Secretary General of Finance Watch, said:

“This paper brings a fascinating perspective, describing the way in which exploitative debt has caused problems in human societies for thousands of years, reflecting the changing power relations, beliefs and living conditions in each period.

“Today, personal debt and inequality are on the rise again and digitisation is creating new ways for vulnerable citizens to be exploited. It is a good time for the EU to overhaul its 10-year old Consumer Credit Directive and protect citizens from irresponsible, overly complex, and high-cost lending.”

Finance Watch’s recommendations for improving the EU’s consumer credit law include:

  • Widen the scope to all credit used by consumers without any exception regardless of their type, provider, amount, duration, interest rate;
  • Introduce more stringent rules on advertising claims;
  • Include the principle of usury rates or cap the annual percentage rate (APR);
  • Regulate abusive fees and charges that take advantage of consumer vulnerabilities, such as rollover charges, penalties for unauthorised overdrafts;
  • Ban dangerous credit in the EU by providing objective criteria;
  • Ban unsolicited and door to door selling of credit, with an updated definition that should include artificial intelligence and big data innovation in marketing practices;
  • Enhance creditworthiness assessment requirements that should be mainly based on the income and expenditure of the borrower, on their budget balance.


For further information or interview requests, please contact:

Charlotte Geiger, Senior Communications Officer at Finance Watch, at or at 0032/(0)474331031.



From January to April 2019, the European Commission invited stakeholders to participate in a public consultation on the evaluation of the Consumer Credit Directive (Directive 2008/48/EC). The evaluation is supposed to assess the effectiveness, efficiency, coherence, relevance and EU added value of the Consumer Credit Directive. Finance Watch published its response to the consultation on 8 April 2019.

The evaluation is planned to be concluded in 2019. A final decision of the Commission on whether this initiative will be pursued is expected by late 2019. The process for a review of the Consumer Credit Directive could then start in early 2020.

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