MEPs have adopted new rules to protect consumers from credit card debt and overdrafts.

Parliament approved new consumer credit rules in September 2023, following an agreement reached with the Council in December 2022.

Consumer credits are loans for the purchase of consumer goods and services. They are often used to pay for cars, travel as well as for household goods and appliances.

Existing EU rules

The existing EU rules – the Consumer Credits Directive – aim to protect Europeans while fostering the EU’s consumer loan market. The rules cover consumer credits ranging from €200 to €75,000 and require creditors to provide information to allow borrowers to compare offers and make informed decisions. Consumers have 14 days to withdraw from a credit agreement and they can repay the loan early, thereby lowering the cost.

The rules were adopted in 2008 and needed to be updated to meet the current environment.

Why changes are needed

The difficult economic situation means more people are searching for loans, and digitalisation has brought new players and products to the markets, including non-banks, such as crowdfunding loan apps.

This means, for example, that it is easier and more widespread to take small loans online – but these can turn out to be expensive or unsuitable. It also means that new ways of disclosing information digitally and of assessing the creditworthiness of consumers using AI systems and non-traditional data need to be addressed.

The current rules do not protect consumers who are vulnerable to over-indebtedness well enough. In addition, the rules are not harmonised between the EU countries.

New consumer credit rules

The new rules say that creditors must ensure standard information to consumers in a more transparent way and allow them to easily see all essential information on any device, including a mobile phone.

Committee members stressed that credit advertising should not encourage over-indebted consumers to seek credit and it should contain a prominent message that borrowing money costs money.

To help determine whether a credit suits a person’s needs and means before it’s granted, MEPs want information such as current obligations or cost of living expenses to be required, but said social media and health data should not be taken into account.

The new rules require:

• Proper assessment of consumer creditworthiness
• Cap on charges
• 14-day unconditional withdrawal option
• Right to early repayment
• A clear warning in ads that borrowing cost money

The new rules cover credits agreements up to €100,000, with each country deciding the upper limit based on local conditions. MEPs want overdraft facilities and credit overrunning, which are becoming increasingly common, to be regulated, but say it should be up to EU countries to decide whether they apply the consumer credit rules to some loans, such as small loans up to €200, interest-free loans and loans to be repaid within three months and with minor charges.

The Council will also have to approve the new rules before they can come into force.

Civil Liberties Committee MEPs backed proposals which would mean border controls within the free movement Schengen area can only be reintroduced when absolutely necessary.

On Wednesday, MEPs adopted a draft report on the reform of the Schengen Borders Code with 39 votes in favour, 13 against, and 12 abstaining, and authorised the start of negotiations with the Council with 49 votes in favour, 14 against, and 0 abstentions. In response to increasingly permanent border controls within the Schengen area, the proposal seeks to clarify rules, strengthen free movement within the EU, and introduce targeted solutions to genuine threats.

MEPs want to ensure a coherent EU response in cases of large-scale public cross-border health emergencies, allowing temporary restrictions on entering the Schengen area, but exempting from them EU citizens, long-term residents and asylum-seekers.

As an alternative to border controls, the new rules would promote police cooperation in border regions. Where third-country nationals with irregular status are apprehended during joint patrols and there is evidence they have arrived directly from another EU country, these people may be transferred to that country if it participates in joint patrols. MEPs want to exclude several categories, including unaccompanied minors, from such returns.

Justified and time-limited border controls, for maximum two years, when necessary

In the text, MEPs propose clear criteria for the imposition of border controls in response to serious threats that endanger the functioning of the Schengen area. There would need to be a justified reason such as an “identified and immediate” threat of terrorism, with tighter time limits for border controls in response to foreseeable threats, up to a maximum of eighteen months. If the threat persists, more border controls could be authorised by a Council decision.

The proposals would also allow for the reintroduction of border controls in several countries when the Commission receives notifications about a particularly serious threat affecting a majority of countries simultaneously, for a period of up to two years.

At the same time, MEPs propose removing certain migration-related concepts from the proposal. They argue that the provisions on the instrumentalisation of migrants (where third countries facilitate or encourage migrants to cross into EU territory with the aim of destabilising countries) should be covered by a separate, dedicated proposal, which EU lawmakers are also currently discussing.

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After the vote, rapporteur Sylvie Guillaume (S&D, France) said: “Protecting the Schengen free movement area and what it represents for 450 million Europeans is at the heart of this report. The negotiations have been difficult, but I am delighted we have managed to safeguard the essence of one of the European Union’s greatest achievements.”

Background

The Parliament has called for a reform of the Schengen Borders Code “to strengthen mutual trust and solidarity, and to safeguard the integrity and full restoration of the Schengen area”, which currently encompasses 27 countries.

In a judgment in April 2023, the Court of Justice of the European Union ruled that border controls re-installed because of serious threats may not exceed six months, and can only be extended when a new threat arises, unless there are exceptional circumstances putting the overall functioning of the Schengen area at risk.

Parliament adopted its position on reducing groundwater and surface waters pollution and improving EU water quality standards.

MEPs want the EU watch lists – which contain substances posing a significant risk to human health and the environment – to be updated regularly to keep pace with new scientific evidence and new chemicals. They also want a subset of specific PFAS (per- and polyfluoroalkyl substances, also known as “forever chemicals”) as well as the PFAS total (parameter which includes the totality of PFAS with a maximum concentration) to be added to the lists for both groundwater and surface water pollutants. Several other substances, including microplastics and antimicrobial resistant microorganisms, should also be added to these lists as soon as suitable monitoring methods identified.

The adopted report also includes stricter standards for several pesticides (including glyphosate and atrazine) and pharmaceuticals.

Producers selling products that contain polluting chemical substances should help finance the monitoring costs, an activity currently financed only by member states.

MEPs adopted the report with 495 votes in favour, 12 against and 124 abstentions.

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After the vote, rapporteur Milan Brglez (S&D, SI) said: “The revision of EU water legislation, including the Water Framework Directive and its two daughter directives, is one of the key policy tools to implement our commitments under the Zero-Pollution Action Plan. Enhanced protection of EU waters is extremely important, especially in the context of the ever more pressing impacts of climate change – combined with industrial and agricultural pollution – on our fresh water resources.”

Next steps

MEPs are ready to start the talks on the final shape of the legislation, once Council agrees on its position.

Background

In line with the European Green Deal’s zero pollution ambition, the Commission tabled in October 2022 a proposal to revise the lists of surface water and groundwater pollutants that need to be monitored and controlled to protect the EU’s freshwater bodies. The new legislation updates the Water Framework Directive, the Groundwater Directive and the Environmental Quality Standards Directive (Surface Water Directive).

In adopting this report, Parliament is responding to citizens’ expectations to protect and restore ecosystems and eliminate pollution, as expressed in proposals 2(4) and 2(7) of the conclusions of the Conference on the Future of Europe.