Scope:

Directive 2008/48/EC on credit agreements for consumers

Evaluation findings

The evaluation provided evidence on whether the current legal framework of Directive 2008/48/EC (Consumer Credit Directive - CCD) is still fit for purpose, via an assessment of its effectiveness, efficiency, relevance, coherence, EU added value and potential for simplification and burden reduction. The evaluation assessed the overall functioning and practical application of the CCD and continued relevance of the original objectives, and established the extent to which the CCD is still relevant in view of new developments. It finds that the CCD has been partially effective in ensuring high standards of consumer protection and fostering the development of a single market for credit in the context of a regulatory landscape showing significant fragmentation across the EU-28. While the CCD has a number of possible shortcomings, a number of important obstacles are due to the application, implementation and enforcement of the Directive as well as wider market developments not foreseen at the time it was drawn up in 2008.

Estimated savings and benefits

The total benefits of the CCD in terms of reduction of consumer detriment (financial and non-financial) are summarised in the Table below. The evaluation showed that the estimated savings from lower consumer detriment due to the introduction of the directive are in total EUR 2 593 million for the EU 28 for the period 2011-2018.

Table. Net benefits of CCD 2011-2018 (million euros, prices 2010)

c	2011	2012	2013	2014	2015	2016	2017	2018	NPV @4%
Consumer financial detriment	80	102	205	216	258	322	382	424	1,542
Time losses (monetised)	59	70	143	161	194	217	243	262	1,051
Total EU28	139	172	348	376	453	539	625	685	2,593

Which objectives did the Commission pursue?

The key measures of the proposal are:

⮚ Include risky loans currently not in scope of the EU regulation, such as loans of less than EUR 200.

⮚ Adapt information requirements to make sure they cater for digital devices.

⮚ Make information related to credit offers more clear and avoid information overload for consumers.

⮚ Address practices that exploit consumer behaviour such as product tying, pre-ticked boxes or unsolicited credit sales.

⮚ Improve rules on the assessment of consumer creditworthiness, i.e. their ability to repay the credit in a sustainable way, to make sure appropriate and proportionate data is used and to prevent over-indebtedness.

⮚ Cap the cost of the credit for consumers.

⮚ Support consumers who experience financial difficulties through forbearance measures and debt advice services.

⮚ Introduce requirements for businesses to put consumers’ needs first and act ethically while ensuring that their staff have an appropriate knowledge and competence on credit.

Estimated savings and benefits

The proposal would entail costs for businesses, but is also expected to reduce their administrative burden, thanks to greater legal clarity. Several measures are already being implemented in some Member States, so businesses in those Member States would not face significant additional costs.

The proposal simplifies certain information requirements and aims at adapting requirements to digital use. Specifically, the proposal will reduce the advertising costs for credit providers/intermediaries on certain media, e.g. radio, while ensuring that consumers get clearer information that is easier to process and understand.

Adapting information requirements for digital use notably through a new Standard European Consumer Credit Overview has an initial cost. However, in the long run it would reduce the burden on businesses, which could provide the full Standard European Consumer Credit Information form by email, without needing to adapt it to digital screens. Since around one third of consumers entered a credit agreement online, this burden reduction could ultimately have a positive impact over 25 million personal bank loans annually.

As regards reduced burden for public administrations, the higher degree of legal clarity and the simplified regulatory framework is expected to reduce the number of complaints and increase the level of certainty and compliance, making enforcement procedures more efficient. Specific measures to reinforce coordination and improve conditions for enforcing the Directive are also expected to result in efficiency gains in the enforcement of the Directive’s obligations.

Specific impacts on SMEs have not been identified as significant, so they have not been assessed separately.

 

Estimated monetisation and quantification

The potential for simplification of requirements for advertising consumer credit on radio broadcasts can be estimated at EUR 1.4 million a year, amounting to 14 million over the period 2021-2030.