New EU Directive to Protect Consumers in Credit Agreements

The European Union has enacted a new directive on consumer credit agreements, aiming to harmonize national legislation and strengthen consumer protection. Effective from November 19, 2023, the directive covers areas such as scope, advertising requirements, general and pre-contractual information, and restrictions on tied selling.

The directive does not apply to all credit agreements, including those for real estate financing or credits exceeding €100,000. Strict rules are imposed on advertising, prohibiting misleading or unfair communication.

Credit intermediaries are required to provide clear and comprehensible general and pre-contractual information, enabling consumers to make more informed decisions. Tied selling is prohibited, while bundled selling is allowed under certain conditions.

The directive emphasizes the importance of thorough creditworthiness assessments before entering an agreement and sets requirements for the form and content of credit agreements. It also grants consumers the right to revoke credit agreements within 14 days and includes measures to limit interest rates and costs.

Source: Directive (EU) 2023/2225, October 18, 2023.

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