As the European Commission aims to achieve a deeper and safer solitary marketplace for credit rating (European Commission 2017a, para. 2.6), at the moment, there isn’t any coherent EU policy agenda when it comes to handling customer overindebtedness. Footnote 93 particularly, the Mortgage Credit Directive adopted post-crisis has departed through the use of approach that is credit-oriented of credit rating Directive and introduced more protective guidelines built to prevent customer overindebtedness. In specific, this directive provides for the duty that is borrower-focused of to evaluate the consumerвЂ™s creditworthiness and imposes restrictions on particular cross-selling techniques. You can question, nonetheless, as to what extent the fundamental variations in the amount of customer security between your two directives are justified, given that dilemmas of reckless financing exist not only in secured but additionally in unsecured credit areas, especially those related to high-cost credit.
Within the light with this, the 2019 overview of the buyer Credit Directive is utilized as a way to reconsider the present method of EU customer credit regulation therefore the underlying standard of a fairly well-informed, observant, and circumspect customer such as the thought of accountable financing. Inside our view, this notion should notify both the growth of credit rating items and their circulation procedure, while having to pay due regard to the axioms of subsidiarity and proportionality. In specific, provided the marketplace and regulatory problems which have manifested on their own in several Member States, it ought to be considered if it is appropriate to incorporate loans below EUR 200 in the range regarding the credit rating Directive, to create item governance guidelines to be viewed by loan providers whenever consumer that is developing services and products, to introduce a definite borrower-focused responsibility of loan providers to evaluate the consumerвЂ™s creditworthiness so that you can effortlessly deal with the possibility of a problematic payment situation, to introduce the lendersвЂ™ responsibility to guarantee the fundamental suitability of financial loans provided as well as credit for customers and sometimes even limit cross-selling practices involving product tying, and also to extend the accountable financing responsibilities of old-fashioned loan providers to P2PL platforms. Further, it should be explored if the EU regulatory framework for credit may be strengthened by presenting safeguards against remuneration policies which could incentivize creditors and credit intermediaries to not act into the customersвЂ™ needs, also more specific and robust guidelines to improve public and personal enforcement in this industry. The role of EBA, which presently does not have any competence to do something beneath the credit rating Directive, deserves attention that is particular. This European supervisory authority could play a crucial role in indicating this is associated with the open-ended EU rules on accountable financing and ensuring a convergence of particular supervisory techniques.
Most likely, exceptionally strict credit rating regulation may limit usage of credit and increase the borrowing charges for customers.
Regulatory experiences in the area of home loan credit and investment solutions might be taken up to speed whenever operationalizing the idea of accountable financing in the region of credit rating, with one caveat that is important. More consumer/retail that is intrusive protection guidelines that are currently relevant in these sectors shouldn’t be extended to your credit rating sector, unless this can be justified by the potential risks for customers in this extremely sector and will not impose a disproportionate regulatory burden on tiny non-bank lenders.
The effect associated with the growing digitalization regarding the credit rating supply from the customer and loan provider behaviour deserves consideration that is special this context.
The EU legislator should take, further interdisciplinary research is needed to shed more light on the indicators and drivers of irresponsible consumer credit lending, as well as the best practices for addressing the problem, both in relation to standard-setting and enforcement in order to determine what action. The confident consumer, and the vulnerable consumer (Micklitz 2016), more research is needed into the consumer image(s) in the consumer credit markets in particular, given the development from one consumer image to multiple consumer images in EU law, such as the responsible consumer. Defining the customer debtor image(s) is essential so that you can establish the appropriate amount of customer security this kind of markets and also to further operationalize the idea of accountable financing within the post-crisis financing environment. The full time now seems ripe for striking a various stability between use of credit and consumer security in EU consumer credit regulation.