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    Briefing Note: Review of the Consumer Credit Directive (CCD)

    Locke Lord Publications

    On 29 June 2018, the European Commission published an evaluation roadmap on the Consumer Credit Directive (CCD).

    Background
    The CCD was intended to create a single market for consumer credit so as to achieve a level playing field for consumer credit across the EU. 

    In 2017 the Commission carried out various actions.

    In a 2017 factsheet it indicated the sorts of issues which it was considering assessing. Valdis Dombrovskis, Vice President in charge of Financial Stability, Financial Services and Capital Markets Union, is quoted within that factsheet stating:

    “European consumers and firms should be able to take full advantage of a true Single Market for financial services. Consumers should have access to the best products available across the EU, not just within their own country. At the same time, we want to explore the full potential of the technology that’s out there. If harnessed well, it has the potential to change for the better the financial industry and the way people access financial serviced”

    The Factsheet claimed that in practice on average only 7% of EU consumers have purchased at least one financial product or service in another EU country. In its 2017 EC Consumer Finance Action Plan the Commission undertook to explore ways of facilitating cross-border access to consumer credit while ensuring a high level of consumer protection with a focus on creditworthiness standards and credit registers.

    In 2017 the Commission also adopted a REFIT Platform opinion on the CCD. This opinion recommended that the Commission assess the relevance, effectiveness and efficiency of some of the CCD provisions and also assess how well these provisions worked alongside provisions of other directives such as the Mortgage Credit Directive (MCD) and the Directive on Unfair Commercial Practices (DUCP).

    The Commission also published a consultation paper titled “Fintech: a more competitive and innovative European Financial sector” in which it stated that the Commission “is committed to ensuring that the EU economy, industry and citizens take full advantage of digitalisation.”

    Against this background the Commission has decided to carry out a full-fledged evaluation of the CCD and has released its “Evaluation Roadmap” to demonstrate what it intends to do.

    The Roadmap
    The Commission notes in the roadmap that the consumer credit market has developed quickly and that an increasingly digitised market creates both opportunities and risks for lenders and consumers. 

    The Commission indicates that it will therefore be looking to assess:

    • whether the original objectives of the CCD have been achieved;
    • how the CCD functions in terms of efficiency and simplification;
    • how the CCD now works with other retail financial services legislation, consumer protection and data protection;
    • whether the CCD remains relevant;
    • whether EU intervention has delivered any additional added value compared to national consumer credit actions.

    In particular, the Commission will gather evidence about the design and distribution phases of credit products, cross-selling, the creditworthiness assessment, credit registers, information disclosure, rights of withdrawal, and the right of early repayment.

    The Commission indicates that the evaluation will draw on the views and experiences of citizens and the wider stakeholder community.

    Timelines
    It appears that the Commission will publish a consultation questionnaire via its central public consultations page by the end of 2018 for a minimum of 12 weeks for respondents to place their comments on in 24 languages.

    In parallel with this consultation the Commission will target the main stakeholders including national authorities, consumer protection bodies, credit providers, industry associations and consumer organisations.

    The Commission has said tentatively that it will release a summary of the consultation by spring 2019 on its website.

    The full evaluation is due to conclude by the end of 2019.

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