The rules are changing for banks, finance companies, intermediaries and merchants who offer installment payments. The rules are changed by the decree of the Interministerial Committee for Credit and Savings (Cicr), published in the Official Journal on 17 August, implementing the consumer credit reform.
The innovation does not only concern traditional personal loans, but also affects the deferred payment formulas used in shops and online purchases.
How protected financing changes
The ICRC loan decree modifies the consumer credit threshold, which rises from 75,000 to 100,000 euros. In transposition of EU Directive 2023/2225, with the Consolidated Banking Act, the scope of protection for all loans requested by natural persons for purposes unrelated to their entrepreneurial or professional activity was extended, up to – precisely – 100,000 euros.
For this range of medium-high amount loans:
- banks and financial intermediaries are required to respect strict standards of pre-contractual and contractual transparency;
- a more rigorous and standardized control on debt sustainability is imposed to prevent over-indebtedness phenomena, excluding however the use of data from social networks.
Furthermore, the legislation has also extended attention to micro-credits and digital payment extensions, such as buy now, pay laterplacing them in a framework of greater surveillance.
New rules for installment payments
With the new rules coming into force:
- the deferred payment formulas, which allow you to immediately purchase an asset by paying it later in installments, lose the previous exclusion benefits and are now classified to all intents and purposes as consumer credit;
- if the installment payment is managed through an agreement with an external financial company that purchases the credit, the operation is considered to all intents and purposes as a loan offered by a third party. Consequently, the rules for consumer credit apply entirely.
For small loans, i.e. those with an amount of less than 200 euros, an anti-splitting clause has been introduced to avoid regulatory circumvention. Therefore, if a single economic operation is divided into multiple contracts, the split credits will be added together and considered as a single amount.
The exceptions
Despite the general extension of the rules, some specific cases remain outside the legislation on consumer credit, namely extensions:
- granted directly by the seller and without costs, when payment takes place within fifty days of delivery and a third party does not intervene to offer the credit;
- within fourteen days offered by certain e-commerce operators, for deferred debit cards repayable within forty days without interest or charges and for some loans granted by the employer to its employees.
Loan advertising: the warning arrives
Precise conditions must also be respected for advertising on financing. In particular, the reform established that announcements relating to credit agreements must contain a clear and visible warning on the cost of borrowing.
The formula established by the regulations is: “Be careful! Borrowing money costs money,” or an equivalent expression. In this way the aim is to make it immediately clear to the consumer that the financing does not simply coincide with the immediate availability of liquidity, but involves an overall cost.
The information must also be presented prominently and accompanied by a representative example that is as consistent as possible with the advertised contract.
Finally, some advertising techniques considered potentially misleading are prohibited. It will not be possible, for example:
- suggest that obtaining financing can improve the consumer’s financial situation;
- minimize the importance of financing already in progress or of reports in databases;
- present credit as a tool capable of increasing available resources, replacing savings or improving living standards.
More checks on repayment capacity
The reform then strengthens the principle of creditworthiness. That is, the financier must carry out an in-depth assessment of the consumer’s ability to support the commitments undertaken, to prevent irresponsible concessions and situations of over-indebtedness.
Credit should therefore be granted when the analysis shows that the consumer will likely be able to comply with the obligations set out in the contract. At this stage:
- the processing of data obtained from social networks and of the particular categories of personal data provided for by the European data protection regulation is prohibited;
- when the creditworthiness assessment is carried out, even partially, through automated processing of personal data, the consumer can request human intervention.
Longer withdrawal and higher refunds
Finally, if the consumer has not received the contractual conditions and information required by law, the new rules provide that:
- if the consumer has not received the contractual conditions and the information required by law, the period for exercising the withdrawal may be up to twelve months and fourteen days from the conclusion of the contract;
- in the event of reimbursement before the deadline, the consumer is entitled to a reduction in the total cost of the credit proportionate to the residual duration of the contract.
Taxes and expenses paid directly by the consumer to a third party are excluded from these conditions.
