Whilst the European Commission aims to attain a much much deeper and safer market that is single 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 avoid customer overindebtedness. In specific, this directive provides for the borrower-focused responsibility of lenders to evaluate the consumerвЂ™s creditworthiness and imposes limits on specific cross-selling methods. You can concern, nonetheless, from what extent the differences that are fundamental the amount of customer security amongst the two directives are justified, given that issues of reckless financing occur not only in secured but additionally in unsecured credit areas, specially those related to high-cost credit.
Into the light with this, the 2019 report about the buyer Credit Directive should always be utilized as a chance to reconsider the approach that is current EU customer credit legislation therefore the underlying standard of a fairly well-informed, observant, and circumspect customer such as the idea of accountable financing. This concept should inform both the development of consumer credit products and their distribution process, while paying due regard to the principles of subsidiarity and proportionality in our view. In specific, because of the marketplace and regulatory problems which have manifested by themselves in several Member States, it must be considered if it is appropriate to add loans below EUR 200 in the range regarding the credit rating Directive, to develop item governance guidelines to be viewed by loan providers whenever consumer that is developing items, to introduce an obvious borrower-focused responsibility of loan providers to evaluate the consumerвЂ™s creditworthiness to be able to efficiently deal with the possibility of a problematic repayment situation, to introduce the lendersвЂ™ responsibility so that the fundamental suitability of financial loans provided as well as credit for customers and on occasion even limit cross-selling methods involving item tying, and also to expand the accountable lending responsibilities of conventional lenders to P2PL platforms. Further, it should be explored if the EU framework that is regulatory credit may be strengthened by presenting safeguards against remuneration policies that will incentivize creditors and credit intermediaries not to ever work within the customersвЂ™ desires, in addition to more specific and robust guidelines to improve public and personal enforcement in this industry. The part of EBA, which currently doesn’t have competence to do something beneath the credit rating Directive, deserves specific attention. This European supervisory authority could play a crucial role in indicating this is associated with open-ended EU rules on accountable financing and ensuring a convergence of particular supervisory techniques.
Regulatory experiences in the area of home loan credit and investment solutions might be taken up to speed whenever operationalizing the thought of accountable lending in your community of credit rating, with one essential caveat. More consumer/retail that is intrusive protection guidelines that are currently relevant during these sectors really should not be extended towards the credit rating sector, unless this will be justified by the potential risks for customers in this extremely sector and will not impose a disproportionate regulatory burden on small non-bank lenders.
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. Determining the buyer debtor image(s) is important to be able to establish the appropriate amount of customer protection such areas and also to further operationalize the idea of accountable financing in the post-crisis financing environment. Enough time now appears ripe for striking a various stability between use of credit and customer security in EU consumer credit regulation.