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Currently, this crucial regulation proposal for all financial consumers is being debated and we aspire to reinforce the principles of responsible lending.
We have joined the great coalition that supports the development of the CCD (Consumer Credit Directive), with the aim of joining forces and ensuring that European provisions adequately protect vulnerable consumers. We want to raise awareness about the need to grant responsible loans. Consumer over-indebtedness is a problem that must be tackled. Likewise, high loan installments can jeopardize the stability of family economies.
The opinion paper, to which we endorse from ASUFIN, sets out the ways in which EU policy makers could help reduce irresponsible lending to consumers and avoid unnecessary over-indebtedness, along with expanding access to credit for solvents consumers.
It is very important to mobilize civil society organizations to advocate for a safe and fair consumer credit market, as the EU regulation (CCD) is currently on the table of the EU institutions.
Key points:
- Usury is not banned throughout the EU, nor are excessive interest rates and the costs of consumer credit limited.
- Creditors can grant credit even when borrowers are unable to repay it.
- The solvency assessment does not take into account possible negative scenarios, such as possible increases in interest rates during the execution of the contract.
- Consumers cannot easily challenge decisions based on credit rating models and are unaware of the types of information that are considered to feed into those models.
- With digitization and big data, it is becoming easier to exploit consumer behavior biases to make them sign a consumer credit agreement that do not meet individual and financial circumstances.
- Consumer credit products are increasingly complex, personalized and sold online without necessarily being adapted to the financial and personal situation of the consumer.
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