On the Bumpy Road to Responsible Lending in the Digital Marketplace: The New EU Consumer Credit Directive

Abstract

On 18 October 2023, the EU adopted the long-awaited New Consumer Credit Directive. This directive will replace the 2008 Consumer Credit Directive which has been criticized for two main reasons. First, the information paradigm of consumer protection reflected in the directive has been widely regarded as incapable of protecting consumers against irresponsible lending. Second, the directive has been viewed unfit for ensuring consumer protection in an increasingly digital marketplace. To remedy the shortcomings of the old directive, the revised directive widens the scope of its application, tailors the existing rules to the consumer needs in the online lending environment, and introduces new, more protective rules. But does this suffice to ensure responsible lending in the digital consumer credit markets? To answer this question, this article critically assesses the key changes introduced by the New Consumer Credit Directive, against the backdrop of the large-scale irresponsible lending practices that have troubled the consumer credit markets across Europe over the last decade or more. It concludes that the revised directive represents a major step forward in combating such practices and protecting European consumers against overindebtedness in the digital marketplace. At the same time, however, the effectiveness of the new directive will depend considerably on its implementation and enforcement in the EU Member States.