Directive (EU) 2023/2225 of the European Parliament and of the Council of 18 October 2023 on credit agreements for consumers and repealing Directive 2008/48/EC

New Directive (EU) 2023/2225, the so-called Consumer Credit Directive 2 (CCD 2), was published in the Official Journal (OJ) of the EU. The Directive basically extends the Consumer Credit Directive of 2008 (Directive 2008/48/EC) to account for changes in the way credit arrangements are made (e.g. via offers over the internet or mobile phone) and to provide for further protections for consumers with the aim of promoting responsible lending practices among lenders. The Directive of 2008 is thereby entirely revoked.
Just like the first (2008) Directive, the new CCD 2 sets out, among others,
(1) the information that must be disclosed to consumers prior to entering into a credit agreement;
(2) the way credit agreements must be drawn up and the information that must be contained in such;
(3) the interest rate that may be charged in credit agreements;
(4) requirements as regards conduct of business when providing credit to consumers; and
(5) the obligations of financial market intermediaries that facilitate credit agreements.
Additionally, the CCD 2 extends the scope of credit agreements falling under its remit to include loans under EUR 200 up to EUR 100,000. Notably, credit agreements exceeding EUR 100,000 for residential property renovation purposes fall outside the CCD 2’s scope. Additionally, the CCD 2 brings various types of loans into its purview, such as crowdfunding credit services, overdraft facilities, interest-free credit, and buy-now-pay-later schemes, as well as leasing agreements with an option to purchase goods or services.
Furthermore, the CCD 2 imposes enhanced information requirements prior to the conclusion of a credit agreement to cater the use of digital services. Specifically, lenders are obligated to prominently display key credit elements on the first page of the Standard European Consumer Credit Information form, including borrowing rates, costs, annual percentage rate of charge, total credit amount, and agreement duration. The information presented should be clear, legible, and suitable for mobile phone screens.
Moreover, the CCD 2 grants consumers the right to withdraw from any credit arrangement without penalties or need to justify their decision within 14-day from the credit agreement date or the receipt of terms and conditions. If terms and conditions are not provided, the withdrawal period extends to 12 months.
To ensure equal access to credit insurance for cancer survivors, the CCD 2 requires Member States to adopt policies and procedures to ensure that such insurance policies should not consider personal data related to a cancer diagnosis after a specified period following the end of medical treatment. This period, determined by Member States, should not exceed 15 years from the end of the consumer’s medical treatment.
Regarding creditworthiness assessments, the CCD 2 mandates that lenders only provide credit to consumers where the outcome of the assessment is positive. Exceptions may be made in specific cases like for healthcare expenses-related credits and student loans, provided that collaterals are posted or it is evidenced that the loan is able to generate future income for the borrower. When assessments rely on automated processes, consumers have the right to request a „meaningful“ explanation from creditors and voice their objections to the results of an assessment.
The CCD 2 further regulates loan advertisements, which must prominently display all cost-related information. Furthermore, it bans certain types of advertisements that imply that taking out loans would enhance a consumer’s financial well-being or that „registered credit in databases have little or no influence on the assessment of a credit application“.
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As the above summary only presents the key changes as compared to the Directive of 2008, please refer to the original legal document for more detailed, comprehensive information.