In a text adopted by the Internal Market and Consumer Protection Committee by 42 votes to 1 with 1 abstention, MEPs say the legislation should cover credit agreements of up to €150,000, the upper limit that is effective, must be determined by the competent national authorities according to the particular economic situation of a Member State. EU countries will also be able to apply limited changes of obligations to small loans of up to EUR 200, loans granted without interest and without other fees or loans that must be repaid within three months and which are subject to low taxes.
Credit rating
MEPs introduced additional criteria to assess the creditworthiness of parties taking out a loan before it is granted, including the need to provide information on consumers’ current obligations and their expenses related to living costs. To assess the creditworthiness of consumers who have little or no credit history, other information may be considered, including from non-bank lenders, telecommunications providers and utilities. Nevertheless, social media data and health information should not be taken into account and the right to be forgotten should be guaranteed.
MEPs also agreed that the European Banking Authority should draw up guidelines specifying how lenders and crowdlending service providers can carry out this assessment.
Clear information for consumers
Consumers should always have basic information to be able to compare different offers and understand the legal and financial consequences of borrowing and credit costs. This information must be prominent and presented in an understandable manner. Consumers should be able to see all essential information at a glance, even on their phone.
They should also receive a reminder that they have the right to cancel the credit agreement or the agreement on the provision of crowdlending services without having to give a reason and within 14 calendar days.
Consumer protection
MEPs stressed that credit advertising should in all cases contain a clear and prominent warning that borrowing money also costs money and should not encourage indebted consumers to apply for credit or lead to the belief that credit agreements provide access to success and social success.
Given that overdrafts and overdrafts are common forms of consumer credit, MEPs want to regulate these financial products to increase the level of consumer protection and avoid excessive indebtedness.
Next step
Once the plenary gives the green light, Parliament’s negotiators will be ready to start negotiations with the Council and the Commission on the final design of this regulation.
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