Consumer Credit Directive – Changes in 2026 and action required by 20 November 2026

With Directive (EU) 2023/2225, the EU is fundamentally reforming the legal framework for consumer credit; it will apply throughout the Union from 20 November 2026 and largely repeals the previous Directive 2008/48/EC. It responds in particular to the digitalisation of the credit market, new forms of distribution and innovative products such as ‘buy now, pay later’. The aim is to substantially strengthen consumer protection, in particular to prevent over-indebtedness, increase transparency and curb abusive business models. As a result, the amendment represents a paradigm shift: whereas the focus was previously on formal information requirements, the emphasis is now shifting to the lender’s material responsibility for responsible lending.

Extended scope of application:

New products under full regulation To implement the Consumer Credit Directive (EU) 2023/2225, Germany has created a legal framework with the adoption of a government bill that requires banks to adapt their compliance structures, lending processes and associated product portfolios. The adjustments relate to the granting of loans (‘credit’) by companies to consumers. The reform primarily addresses gaps that have arisen as a result of digitalisation and new forms of credit. The scope of application is being significantly expanded: In future, it will also cover microloans (including amounts under £200), interest-free and fee-free loans, short-term loans of up to three months and ‘buy now, pay later’ models; selected leasing contracts with a purchase option are also included, and the upper limit is rising to £100,000. This regulates product types that were previously often outside the scope of consumer credit law. For providers of embedded finance or BNPL products in particular, this means that creditworthiness assessment, documentation and consumer information processes must be fully implemented. Real estate financing is not affected by this. In summary, the new directive is intended to lead to lower-risk and more transparent credit products.

Key elements of the draft law:

• Stricter credit checks: consumer protection against excessive debt
• Introduction of leniency measures: in the event of financial difficulties on the part of consumers
• Protection of sensitive data: no use of health data or social media information
• Expansion of new forms of credit:
  • interest-free loans
  • short-term loans
  • Loans under EUR 200
  • Deferred payments (e.g. buy now, pay later)
• Maximum revocation period: limited to 12 months and 14 days in the event of incorrect information
• Strengthening rights in relation to overdraft facilities:
  • Introduction of a right of withdrawal for consumers
  • no termination by the bank with immediate effect
  • Offer to repay the amount in 12 equal monthly instalments before initiating enforcement proceedings for debt collection.

Avoiding bureaucracy and scope for manoeuvre:

• Exception: purchase on account: not subject to the new rules – however, particularly large online retailers may be affected
• Transfer of obligations to intermediary payment or financing institutions: bundling of regulatory obligations for merchants and online marketplaces
• Limitation of information requirements: a clear, concise information sheet is sufficient
• Abolition of the written form requirement: Text form (e.g. email) will suffice in future
• No further advertising regulations: stricter rules for credit advertising

 

Strategic action required for banks and credit intermediaries

The resulting need for action on the part of banks and other credit intermediaries varies depending on product diversity and business model, but must be considered and implemented strategically.

The following activities must therefore be analysed:

• Analysis of the product portfolio – In order to comply with stricter abuse protection rules and advertising bans, the product range should be reviewed and revised. This raises the question of whether the effort involved in making adjustments is worthwhile or whether discontinuing individual products is the more economical decision.
• Resource and time planning – The necessary resources, particularly staff, must be planned in good time for the analyses, decisions, introduction and implementation. In particular, the provision of information and training for staff should be considered and prioritised.
• Integration of risk management and compliance –The risk profile should be revised and adjusted as a result of the extensions to the directive, particularly in the area of forbearance measures (deferrals/repayment adjustments). In the event of payment difficulties, there is an obligation to refer the debtor to debt counselling and also to exercise greater forbearance in the context of enforcement.
• Review and adjustment of remuneration and commission models – Since the amount of remuneration and commissions may not be linked to the volume of lending, agreements and contracts relating to such remuneration must be reviewed and adjusted if necessary. Depending on the business model, this can lead to a considerable amount of coordination and modification work.
• Adjustments to the creditworthiness assessment – The amendment requires banks to carry out stricter creditworthiness checks. Loans may only be granted if repayment or amortisation is likely. This increased effort can be streamlined through automation, digitalisation and the use of AI, for example.

In addition to technical adjustments (e.g. automation of creditworthiness checks, creation of forms and contracts), strategic decisions must therefore also be made and financial and human resources must be allocated for IT, process modelling and process adaptation, and for employee training.

It is therefore advisable to analyse the following aspects:

• Analysis of the product portfolio – in order to comply with stricter abuse protection rules and advertising bans, the product range should be reviewed and revised. This raises the question of whether the effort involved in making adjustments is worthwhile or whether discontinuing individual products is the more economical decision.
• Resource and time planning – the necessary resources, particularly staff, must be planned in good time for analyses, decisions, introduction and implementation. In particular, employee information and training should be considered and prioritised.
• Integration of risk management and compliance – the revisions to the directive, particularly in the area of forbearance measures (deferrals/repayment adjustments), should result in a review and adjustment of the risk profile.
• Review and adjustment of remuneration and commission models – as the level of remuneration and commissions must not be linked to the volume of lending, agreements and contracts relating to such remuneration must be reviewed and adjusted if necessary.
• Adjustments to creditworthiness checks – the amendment requires banks to carry out stricter creditworthiness checks. Loans may only be granted if repayment or amortisation is likely.

 

Supervisory and liability aspects

The directive has been in force since 19 November 2023. The new regulations must be applied from 20 November 2026. Supervisory authorities will increasingly check compliance with the new requirements. In addition to possible fines, regulatory measures and reputational risks may be imposed in the event of systematic violations. In particular, the stricter creditworthiness assessment may have liability implications if consumers claim that loans were granted without realistic repayment forecasts. Clear documentation and robust internal control systems are therefore becoming increasingly important.

Conclusion

The Consumer Credit Directive 2023/2225 is not merely a formal adjustment of existing regulations, but leads to a substantial realignment of the consumer credit business. The focus is shifting from information requirements to material responsibility for responsible lending.

If you require support for implementation and introduction, particularly when executing test cases, in quality assurance or in the context of employee training, we will be happy to assist you with our experience and expertise. Please contact us.