Reckless Lending into the Post-Crisis age: could be the EU Consumer Credit Directive Fit for the function?

Abstract. Significantly more than a ten years following the outbreak of…

Significantly more than a ten years following the outbreak regarding the international economic crisis, customers throughout the EU have already been increasing their degree of financial obligation when it comes to both amount and worth of credit rating items. Among the list of cause of this trend will be the low interest environment, the novel business methods of lenders targeted at finding brand new income sources, such as for example charges and fees on loans, while the innovative company models appearing in an extremely electronic market, such as for example peer-to-peer financing. These developments provide brand new dangers to consumers and pose new challenges for regulators when it comes to how exactly to deal with them. This short article aims to discover the problematic components of credit rating supply when you look at the post-crisis lending environment across the EU also to evaluate as to the extent the 2008 Consumer Credit Directive currently in effect, which is designed to make sure sufficient customer security against irresponsible lending, is fit for the function today. The article explores the general meaning of “responsible lending” with emphasis on consumer credit, identifies the most imminent irresponsible lending practices in the consumer credit markets, and tentatively analyses their key drivers in this context. It reveals some essential restrictions of this customer Credit Directive in supplying consumer that is adequate against reckless lending while offering tentative suggestions for enhancement. (more…)