A Guide to Financial Regulation for Fintech Entrepreneurs

SHEET 6Consumer Credit Directive

Consumer Credit Directive—The regulation dealing with consumer credit, in particular its marketing, and the calculation of APRs

Summary

This regulation specifies what the requirements are when consumer credit is marketed, and in particular which information must be present to allow consumers to compare different products. The list of required information is long but not surprising—it contains things like the identity of the counterparties and their regulators, a full schedule of cash flows, and a detailed breakdown of charges. A key figure to be reported is the annual percentage rate (APR), and detailed and specific instructions of how to compute it are given.

Relevance for Fintech Companies

This short regulation is relevant for Fintech companies that operate in the space of consumer lending, whether it be as lenders, advisors, or intermediaries.

References

• Directive 2008/48/EC (CCRD)
• Directive 2014/17/EU (MCD)

The Consumer Credit Directive is 2008/48. A related directive is the Consumer Mortgage Credit Directive 2014/17.

6.1 Definition and Scope

This regulation addresses certain aspects of marketing and providing credit to consumers in the EU (Art 1), notably the requirement to provide sufficient information before a contract is agreed, including an annual percentage rate of charges (APR). Consumers in this context are natural persons who are acting for purposes which are outside their trade, business, or profession (Art 3).