First, it seeks to locate the problematic areas of credit rating provision into the post-crisis environment that is lending the EU
From this history, the purpose of this short article is twofold.
Next, it tries to evaluate from what extent the 2008 credit rating Directive is fit because of its purpose as far as the consumer protection against irresponsible lending practices is concerned today. The analysis commences by having a research of this basic concept of вЂњresponsible lendingвЂќ within the context of customer creditвЂ”that is, unsecured credit given to individual, home, or domestic purposes. Building upon the contours regarding the notion of accountable lending which has emerged with this quest, plus the link between the empirical research carried out because of the writers, this article afterwards identifies probably the most imminent reckless financing techniques when you look at the credit rating areas over the EU and tentatively analyses their key drivers. Aside from the desk research, the empirical study included a few semi-structured interviews with all the representatives associated with customer companies and national competent authorities directed at verifying the initial findings and getting more information on the problematic facets of credit rating, both in old and brand new Member States. Footnote 5 this article then proceeds to look at from what extent the customer Credit Directive acceptably addresses the issue of reckless financing and analyses customer security criteria and their enforcement inside the broader EU framework that is regulatory credit. The latter also incorporates a wide range of horizontal EU measures, in specific the unjust Contract Terms Directive Footnote 6 and the Unfair Commercial techniques Directive. Footnote 7 This analysis reveals some essential restrictions for the present EU framework that is regulatory credit rating, in particular compared to the customer Credit Directive, in supplying sufficient customer security up against the reckless financing techniques previously identified. The writers conclude by providing tentative strategies for improvement and pinpointing areas for further research.
The concept of responsible lending has emerged in response to these problems.
The meaning of this general concept will be explored in more detail in the light of the existing literature, legislation, and policy documents in the following. An effort is built to operationalize that is further when you look at the context of credit rating transactions.
In terms of the consumerвЂ™s creditworthiness assessment is worried, the difference between a вЂњlender-focusedвЂќ and a вЂњborrower-focusedвЂќ test made by the United KingdomвЂ™s FCA is especially useful in determining the range of these an evaluation. A borrower-focused test involves the assessment of credit affordability, which is about how difficult it may be for the consumer to repay credit (FCA 2017a, p. 4) while a lender-focused test is limited to the assessment of credit risk. This dichotomy addresses the aforementioned problem that is mentioned the lenderвЂ™s curiosity about minimizing its credit danger may well not constantly offer an acceptable motivation personalbadcreditloans.net/reviews/check-city-loans-review/ for the lending company to give that loan which will be when you look at the desires regarding the customer debtor. So that you can guarantee accountable financing, therefore, the lenderвЂ™s responsibility to evaluate the consumerвЂ™s creditworthiness, inside our view, should by no means be restricted to the evaluation of credit danger and may have the creditworthiness check that is borrower-focused.