The Consumer Credit Directive, created in 2008, remains purposeful

The Consumer Credit Directive was adopted 10 years ago, and the European Commission is therefore assessing whether the directive is still purposeful in view of all market developments since 2008. The Chamber considers that the directive is generally effective and appropriate, and that any changes must be reasonable in order to avoid over-regulation and innovation slowdown.

The directive guarantees the consumer a number of rights

The directive guarantees consumers the right to withdraw from the credit agreement within 14 days, early repayment of credit and obligation on credit providers to assess creditworthiness before entering into a contract. The directive also ensures that all consumers across the European Union receive standard and easily comparable pre-contractual information on the main features of credit offers.

It is important to ensure consumer awareness

Information technology and e-services allow you to make transactions without interacting with the other party and process all financial information digitally and quickly. Lack of immediate contact can lead to irresponsible borrowing and therefore the possibility of withdrawing from the contract within 14 days is very important for the consumer.

Due to asymmetry of information in the financial services sector and the complex nature of financial services, credit institutions must act responsibly in creating credit relationships and contribute to creating the conditions for the client to assess the appropriateness of the loan or credit relationship and the risks involved.

Information on financial services and contracts must be simple and comprehensible. However, this may not produce the expected results because it is necessary to understand the different indicators of the figures, the specific concepts, and to be able to assess the risks as a whole (financial literacy). According to an OECD study, financial literacy would need improvement in Estonia.

Therefore, with regard to the objectives of the directive, the provisions concerning the clarification of the definition of the annual percentage rate of charge (total cost of credit to the consumer, expressed as an annual percentage of the total amount of credit) and the European Consumer Credit Information Sheet are very important. Using the standard form, the consumer can compare the terms of the contract with those offered by other creditors.

According to the Chamber of Commerce, the directive is generally effective and appropriate. Society is developing rapidly, with the need for regulatory changes, but they must be reasonable to avoid over-regulation and innovation slowdown.