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(1) Directive 2008/48/EC of the European Parliament and of the Council lays down rules at Union level concerning credit agreements for consumers.

(2) In 2014, the Commission presented a report on the implementation of Directive 2008/48/EC. In 2020, the Commission presented a second report on the implementation of that Directive and a Commission Staff Working Document with the results of a regulatory fitness and performance evaluation of that Directive, which included broad consultation of relevant stakeholders.

(3) Those reports and consultations revealed that Directive 2008/48/EC has been partially effective in ensuring high standards of consumer protection and fostering the development of a single market for credit, and that such objectives are still relevant. The reasons why that Directive has been only partially effective stem both from the Directive itself, as for instance imprecise wording of particular articles, and from external factors, such as the developments linked to digitalisation, the practical application and enforcement in Member States as well as from the fact that certain aspects of the consumer credit market are not covered by that Directive.

(4) Digitalisation has contributed to market developments that were not foreseen at the time when Directive 2008/48/EC was adopted. In fact, the rapid technological developments registered since the adoption of that Directive have brought significant changes to the consumer credit market, both on the supply side and on the demand side, such as the emergence of new products and the evolution of consumer behaviour and preferences.

(5) The imprecise wording of certain provisions of Directive 2008/48/EC, allowing Member States to adopt diverging provisions going beyond those provided for in that Directive, resulted in a fragmented regulatory framework across the Union in a number of aspects of credit agreements for consumers.

(6) The de facto and de jure situation resulting from those national differences in some cases leads to distortions of competition among creditors in the Union and creates obstacles to the internal market. The situation restricts consumers’ ability to benefit from a gradually increasing offer of cross-border credit, which is expected to grow further as a result of digitalisation. Those distortions and restrictions may in turn have consequences in terms of reduced demand for goods and services. The situation also leads to an inadequate and inconsistent level of protection for consumers across the Union.

(7) In recent years, credit offered to consumers has evolved and diversified considerably. New credit products have appeared, in particular in the online environment, and their use continues to develop. This has led to legal uncertainty with regard to the application of the Directive 2008/48/EC to such new products.

(8) This Directive complements the rules set out in Directive 2002/65/EC of the European Parliament and of the Council . In order to ensure legal certainty, it should be clarified that in the event of conflict between the provisions of this Directive and those of that Directive, the provisions of this Directive, as lex specialis, should apply.

(9) In accordance with Article 26 of the Treaty on the Functioning of the European Union (TFEU), the internal market comprises an area in which the free movement of goods, persons and services is ensured. The development of a more transparent and efficient legal framework for consumer credit should increase consumer trust and protection, and facilitate the development of cross-border activities.

(10) In order to improve the functioning of the internal market for consumer credits, it is necessary to provide for a harmonised Union framework in a number of core areas. In view of the developing market in consumer credit, in particular in the online environment, and the increasing mobility of Union citizens, forward-looking Union legislation which is able to adapt to future forms of credit and which allows Member States the appropriate degree of flexibility in their implementation will help to create a level playing field for businesses.

(11) Article 169(1) and Article 169(2), point (a), TFEU provide that the Union is to contribute to the attainment of a high level of consumer protection through measures adopted pursuant to Article 114 TFEU. Article 38 of the Charter of Fundamental Rights of the European Union (‘the Charter’) provides that Union policies are to ensure a high level of consumer protection.

(12) It is important that consumers benefit from a high level of protection. Thus, it should be possible for the free movement of credit offers to take place under optimum conditions for both those who offer credit and those who require it, with due regard to specific situations in the Member States.

(13) Full harmonisation is necessary in order to ensure that all consumers in the Union enjoy a high and equivalent level of protection of their interests and to create a well-functioning internal market. Member States should therefore not be allowed to maintain or introduce national provisions diverging from those laid down in this Directive, unless otherwise provided for in this Directive. However, such restriction should only apply where there are provisions harmonised in this Directive. Where no such harmonised provisions exist, Member States should remain free to maintain or introduce national legislation. Accordingly, Member States should have the possibility to maintain or introduce national provisions on joint and several liability of the supplier of goods or the provider of services and the creditor. Member States should also have the possibility to maintain or introduce national provisions on the cancellation of a contract for the sale of goods or supply of services where the consumer exercises his or her right of withdrawal from the credit agreement. In that respect, Member States, in the case of open-end credit agreements, should be allowed to fix a minimum period needing to elapse between the time when the creditor asks for reimbursement and the day on which the credit has to be reimbursed.

(14) The definitions set out in this Directive determine the scope of harmonisation. The obligation on Member States to transpose this Directive should therefore be limited to its scope as determined by those definitions. However, this Directive should be without prejudice to the application by Member States, in accordance with Union law, of the provisions of this Directive to areas not covered by its scope. A Member State could thereby maintain or introduce national legislation corresponding to this Directive or certain provisions of this Directive on credit agreements falling outside its scope, for instance on credit agreements upon the conclusion of which the consumer is requested to deposit an item as security in the creditor’s safe-keeping and where the liability of the consumer is strictly limited to that deposited item, or on credit agreements involving a total amount of credit of more than EUR 100 000. Furthermore, Member States could also apply this Directive to linked credit which does not fall within the definition of a linked credit agreement set out in this Directive. Thus, the provisions of this Directive on linked credit agreements could be applied to credit agreements that serve only partially to finance a contract for the supply of goods or provision of a service.

(15) A number of Member States have applied Directive 2008/48/EC to areas not covered by its scope to enhance the level of consumer protection, while other Member States have different national rules regulating those areas stemming from market specificities, thereby maintaining certain divergences between the national law of different Member States with regard to those types of credits. In fact, several of the credit agreements not falling within the scope of Directive 2008/48/EC can be detrimental for consumers, including short-term high-cost credit agreements whose amount is typically lower than the minimum threshold of EUR 200 set out in that Directive. In that context, and with the aim of ensuring a high level of consumer protection and of facilitating the cross-border consumer credit market, this Directive should cover some agreements that were excluded from the scope of Directive 2008/48/EC, such as credit agreements for consumers involving a total amount of credit of less than EUR 200. Likewise, other potentially detrimental products, because of the high costs they entail or high fees in the case of missed payments, should be covered by this Directive, to ensure increased transparency and better consumer protection, resulting in higher consumer confidence. To that extent, hiring or leasing agreements with an option to buy, credit agreements in the form of an overdraft facility and where the credit has to be repaid within one month, credit agreements where the credit is granted free of interest and without any other charges, and credit agreements under the terms of which the credit has to be repaid within three months and only insignificant charges are payable should not be excluded from the scope of this Directive. However, for some of those credit agreements that were excluded from the scope of Directive 2008/48/EC and should be covered under this Directive, namely credit agreements involving a total amount of credit of less than EUR 200, credit granted free of interest and without any other charges and with only limited charges payable by the consumer for late payments and credit to be repaid within three months with only insignificant charges, Member States should be able to exclude the application of a defined and limited number of provisions of this Directive related to advertisement, pre-contractual information and contractual information, in order to avoid an unnecessary burden for creditors, taking into account the market specificities and the particular characteristics of those credit agreements, such as their shorter duration, while ensuring a higher level of consumer protection.

(16) ‘Buy now, pay later’ schemes whereby the creditor grants credit to a consumer for the exclusive purpose of purchasing goods or services provided by a supplier, which are new digital financial tools that let consumers make purchases and pay them off over time, are often granted free of interest and without any other charges, and should therefore be included in the scope of this Directive.