On the 8th of April, COFACE-Families Europe submitted a joint reply to the consultation on the revision of the Consumer Credit Directive (CCD). The joint reply, to which COFACE-Families Europe contributed, was coordinated by Finance Watch, of which COFACE-Families Europe is an associate member.
This consultation and revision process is a key opportunity to revise some essential aspects of the Directive and close a certain number of loop holes and loose ends to ensure that financial service providers engage in responsible lending practices.
The most important recommendations put forward by COFACE-Families Europe in the response include:
- Revising the scope by including credits below the amount of 200€.
- Addressing new emerging business models which circumvent the CCD (for instance, issuing small loans at 0% interest but with strong penalty fees in case of late repayment).
- Issuing a clear definition of what a proper creditworthiness assessment should be, making a clear distinction between credit risk assessment and creditworthiness, and clarifying which data are strictly necessary for the purpose of creditworthiness.
- Explore the emerging challenges presented by Artificial Intelligence and Big Data, leading to automated decision making in many business practices of financial service providers, including targeted advertising and individual risk based pricing in insurance.
- Including the obligation for each Member State to set interest rate caps.
For more information about the revision of the Consumer Credit Directive, visit the official website of the Commission here: https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2018-3472049_en
For more information about COFACE-Families Europe’s work on financial inclusion, please visit our website here: https://www.coface-eu.org/category/consumers/financial-inclusion/
Or contact Martin Schmalzried: firstname.lastname@example.org