FEANTSA joins the Coalition for a Safe EU Consumer Credit Market to ensure provisions adequately protect vulnerable consumers

Read the Opinion Paper here (online PDF)
Read the Press Release here (online PDF)

FEANTSA has joined the Coalition for a Safe EU Consumer Credit Market with the aim of joining forces with expert organisations to ensure that the provisions adequately protect vulnerable consumers. We would like to raise awareness about the need for responsible lending. Consumer over-indebtedness is an issue among homeless people in some countries. High loan instalments can eat up most of a person’s income, posing a serious risk of poverty and homelessness.

On 10th November 2021, the coalition published an Opinion Paper on ways EU policymakers could help to reduce irresponsible consumer lending and prevent unnecessary over-indebtedness, together with broadening access to credit for creditworthy consumers.

The wide impacts of credit on the daily lives of citizens means that a broad range of civil society organisations are mobilised to raise their voices, concerns, and recommendations to achieve some key objectives for a safe and fair credit market.

The current proposal for a revision of the Consumer Credit Directive made by the EU Commission is now being discussed at the EU Parliament. The Commission’s revised proposal, although substantially improved, still suffers from shortcomings. The objective of tackling bad debt and over-indebtedness is not fully addressed.

Therefore, it is very important to mobilise civil society organisations to advocate for a safe and fair consumer credit market as the EU regulation (CCD) is currently on the table of the EU institutions.

Key points:

·      There is no EU-wide ban on usury and no capping of excessive interest rates and consumer credit costs

·      Lenders can grant credit even when borrowers do not have the capacity to repay it

·      The creditworthiness assessment does not consider possible negative scenarios, such as possible increases in interest rates during the contract performance

·      Consumers are not able to easily contest decisions based on credit scoring models and are not aware of the types of information used to feed such models

·      With digitalization and big data, it becomes increasingly easy to exploit consumers’ behavioural biases to make them sign a consumer credit contract that is not suited to their individual and financial circumstances

·      Consumer credit products are increasingly complex, personalised, and sold online without necessarily being adapted to the consumer’s financial and personal situation