From Consumer Credit to Consumer Credits? Merits and Flaws of the 2008/48/EC Directive’s Reform Proposal

Abstract

European consumer credit law is at a crossroads. The modest effectiveness and the increasing obsolescence of the 2008/48/EC (European Community) Directive’s legal toolkit have convinced the EU (European Union) policymaker to take action to ensure better protection for borrowing consumers. The Commission’s Proposal for a Directive on consumer credits, released in June 2021 and now on the verge of the final approval, is a promising attempt to strengthen and update the legal framework. The Proposal sets forth stringent responsible lending obligations, tailored business conduct rules, and revisited scope and definitions to encompass previously excluded credit services. The present work critically engages with the reform’s rationale and contents. The Proposal presents itself as the long-awaited modernization of consumer credit that catches up with digitization and newly emerged credit markets. This paper shows that the most significant merit of the reform draft is the attempt to implement the principle of responsible lending in unsecured consumer credit. This is mainly – but not exclusively – achieved through aligning the Directive with other pieces of EU regulation on credit and financial markets. On a different note, the paper argues that the extension of the Directive’s reach to crowdfunding, as conducted without sufficient adaptation of the substantive rules, came with the risk of legal loopholes and ambiguities in one of the most innovative and elusive domains of financialization. The partial reconsideration of this extension in the latest versions of the Proposal is therefore less criticisable than it appears at first glance.