Extract of the Introduction

The mis-selling of consumer loans can have dire consequences for consumers, especially the most vulnerable ones. Vulnerable consumers who have been mis-sold a loan often find themselves in a situation where they are forced to take out additional credit and face high default and/ or late payment fees if they are unable to repay their original loan. This, in turn, often leads to over-indebtedness, and with it a financial situation for debtors that does not allow them to lead a decent life. Over indebtedness often results in social exclusion and psychological and health issues for consumers. The mental and physical health repercussions of over-indebtedness also have a detrimental effect on a country’s economic growth and its social benefit system, since they lead to large costs for medical care services, a decline in production, and high costs of the social insurance/unemployment benefit systems. Hence, it is crucial to address this issue and its root causes in the EU.