EU Directive on Consumer Credit Contracts


By Marco Romanelli and Alberto Mozzi

On October 30, 2023, the Official Journal of the European Union published Directive (EU) 2023/2225, known as “CCD2,” concerning consumer credit contracts.

Member States are required to adopt the necessary regulatory provisions to comply with CCD2 by November 20, 2025, and to apply them from November 20, 2026. This marks the definitive repeal of the existing Directive 2008/48/EC (“CCD“).

CCD2 aims to enhance consumer protections included in CCD, taking into account the rapid technological evolution in recent years.

Key highlights introduced by CCD2 include:

Expansion of Scope:
Unlike CCD, CCD2 applies to consumer credit contracts below Euro 200 and up to Euro 100,000. However, this threshold does not apply to loans for the restructuring of a residential property, not secured by mortgages, similar guarantees, or other rights on the property.
CCD2 also applies to lease or leasing contracts, provided they include an obligation or option to purchase the contracted asset.

Exemptions for Payment Deferrals:
CCD2 generally does not apply to payment deferrals granted by merchants for the purchase of goods and services, provided they are (a) free, (b) the purchase price is fully paid within 50 days of delivering the goods or services, and (c) no third party offers consumer credit. Exemptions for deferrals granted by suppliers other than micro-enterprises and SMEs for the remote purchase of goods or services are excluded from the scope of CCD2 only if they are (a) free, (b) the price is fully paid within 14 days of supplying the goods or services, and (c) no third parties offer or purchase credits.

Combined and Aggregated Marketing:
CCD2 prohibits combined marketing practices (offering or marketing a credit contract in a package with other distinct financial products or services if the credit contract is not available separately) as they may induce consumers to enter into non-beneficial credit contracts. An exception allows financiers to request consumers to subscribe to an insurance policy linked to the credit contract, limited by the obligation for financiers to accept a policy from a provider other than the one they indicate, as long as it provides an equivalent level of coverage.
Aggregated marketing practices (offering or marketing a credit contract in a package with other distinct financial products or services, where the credit contract is made available separately to the consumer) are allowed.

Advertising Requirements:
CCD2 mandates the inclusion of a representative example and the phrase “Warning! Borrowing money costs money” in advertisements. If the chosen channel (e.g., web advertising) does not allow clear visibility of all basic information in the representative example, it can be provided through clicks or scrolling vertically or horizontally on the web page where the financing is advertised.

General Information:
CCD2 introduces the obligation to draft the so-called “general information,” documents to be made available to consumers containing information about credit contracts offered by financiers. Given that advertising tends to focus on one or more products, “general information” aims to make consumers aware of the wide range of products and services offered by financiers and their key features.

Consumer Reminder:
In cases where pre-contractual information is provided to the consumer less than one day before they are bound by the contract or credit offer, CCD2 obliges financiers to send consumers a reminder of the possibility to withdraw from the contract within 14 days of its conclusion.

Creditworthiness Check:
CCD2, in addition to more detailed regulation compared to CCD on creditors’ obligation to check consumers’ creditworthiness, grants consumers the right to request and obtain from the creditor a clear explanation of the creditworthiness assessment. Consumers can express their opinion and request a review of the creditworthiness assessment and the decision taken in case of using automated data processing methods.

Reduction of Total Credit Cost in Case of Early Loan Repayment:
In line with the Lexitor judgment, CCD2 stipulates that, in the event of early loan repayment, consumers have the right to partial reimbursement of all costs imposed on them by the creditor, including those not dependent on the duration of the loan.

Implied Consent:
Of particular relevance for remote onboarding procedures is CCD2’s provision prohibiting financiers from inferring consumer consent for the conclusion of credit contracts or the purchase of ancillary services using pre-set options. CCD2 clarifies that such consent must be given through a clear positive action by the consumer; thus, consent cannot be considered expressed through silence, inactivity, or pre-selection of checkboxes.

Enablement, Registration, and Supervision for Credit Intermediaries:
CCD2 establishes that Member States ensure that credit intermediaries undergo a process of enablement, registration, and supervision. Credit intermediaries include providers of goods and services, with the possibility for Member States to exempt from enablement and registration requirements those providers of goods or services qualifying as micro-enterprises or SMEs, provided they act as (a) credit intermediaries on an accessory basis or (b) creditors on an accessory basis, granting credit in the form of interest-free payment deferrals to purchase goods or services offered by them.