The IMCO parliamentary committee, in charge of the new draft directive on consumer credit, has recently delivered its report.
We note important advances on key points of our recommendations.
With these proposed amendments, we believe that the directive should allow, in the coming years, to
- develop a better quality – less dangerous – credit offer (the credit check and the data to be used for this is of high quality);
- to offer credits that are better adapted (tailor-made) to the financial situation of consumers and thus avoid the syndrome of “too much credit”, as it is still too often observed today;
- to prohibit misleading advertising messages, or inciting to irresponsible indebtedness;
- to guarantee a quality “pre-contractual” information whatever the sales channel (digital or not) facilitating the choice and the comparisons by the consumer;
- to present more clearly the possible risks and consequences of late payment;
- to improve support measures for borrowers experiencing repayment difficulties, encouraging them to recover rather than increasing the risk of overindebtedness;
- to provide for the setting up, by Member State, of independent, professional debt mediation services free of charge for the beneficiaries;
- to protect defaulting borrowers against debt collection practices that do not comply with human dignity.
This non-exhaustive list of the numerous amendments prepared by the IMCO Commission (rapporteur Ms. Kateřina KONEČNÁ) underlines the quality of perception of the reality of the current credit market and anticipates the changes to be expected in the coming years.
Two salient points, however, would, in Financial Inclusion Europe’s view, merit further exploration:
- the requirement for member states to develop a common method of calculating loan-to-value ratios – this regulatory tool being the only one that allows for the limitation of default levels (risk appetite) of industrial credit models;
- developing monitoring of the European consumer credit market based precisely on the default and arrears rates practiced by lenders, according to the type of credit and the type of sales channel