Directive (EU) 2023/2225 of the European Parliament and of the Council of 18 October 2023 on credit agreements for consumers and repealing Directive 2008/48/EC
Directive (EU) 2023/2225 of the European Parliament and of the Councilof 18 October 2023on credit agreements for consumers and repealing Directive 2008/48/ECTHE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114 thereof,Having regard to the proposal from the European Commission,After transmission of the draft legislative act to the national parliaments,Having regard to the opinion of the European Economic and Social CommitteeOJ C 105, 4.3.2022, p. 92.,Acting in accordance with the ordinary legislative procedurePosition of the European Parliament of 12 September 2023 (not yet published in the Official Journal) and decision of the Council of 9 October 2023.,Whereas:(1)Directive 2008/48/EC of the European Parliament and of the CouncilDirective 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC (OJ L 133, 22.5.2008, p. 66). 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 CouncilDirective 2002/65/EC of the European Parliament and of the Council of 23 September 2002 concerning the distance marketing of consumer financial services and amending Council Directive 90/619/EEC and Directives 97/7/EC and 98/27/EC (OJ L 271, 9.10.2002, p. 16).. 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 100000. 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.(17)Certain deferred payments, where a supplier of goods or a provider of services gives the consumer time to pay for a good or service free of interest and without any other charges except for limited charges for late payments in accordance with national law, should be excluded from the scope of this Directive, provided that there is no third party, such as in "buy now, pay later" schemes, offering credit for the good or service and that the payment is to be entirely executed in a limited time-frame of 50 days from the delivery of the good or provision of the service. In fact, such deferred payments are business practices commonly used to allow consumers to pay only after receipt of the goods or services, which are beneficial for consumers, for instance in the case of deferred payment of medical bills where hospitals give time to consumers to pay for medical expenses. That exclusion should be restricted for certain large online suppliers of goods or providers of services which have access to a large customer base, where a third party is neither offering nor purchasing credit and where payment is to be entirely executed within 14 days of the delivery of the goods or services, free of interest and without any other charges and with only limited charges payable by the consumer for late payments imposed in accordance with national law. Such large online suppliers, considering their financial capacities and their ability to drive consumers towards impulsive buying and potentially over-consumption, would otherwise be able to offer deferred payment in a very extensive way without any safeguard for consumers and to weaken fair competition with other suppliers of goods or providers of services. Such a restriction would always allow consumers to make payments in a convenient way within two weeks, while ensuring that, if large online suppliers of goods or providers of services want to provide credit on a large scale with a longer timeframe, they are subject to this Directive.(18)As described in recital 17 of Regulation (EU) 2015/751 of the European Parliament and of the CouncilRegulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on interchange fees for card-based payment transactions (OJ L 123, 19.5.2015, p. 1)., deferred debit cards are credit cards commonly available on the market where the total amount of transactions is debited from the cardholder account at a pre-agreed specific date, usually once a month, without interest to be paid. Member States should be able to exempt from this Directive certain credit agreements in the form of deferred debit cards, as such credit agreements can help households to better adjust their budget to a monthly income, when the credit needs to be repaid within 40 days, is free of interest and without any other charges and with only limited charges linked to the provision of the payment service, and is provided by a credit institution or a payment institution. That exemption should be without prejudice to the application of relevant provisions on overdraft facilities or overrunning, which should apply in case the repayment exceeds the positive balance in the current account.(19)Hiring and leasing agreements where an obligation or an option for the consumer to purchase the object of the agreement is not laid down either in the agreement itself or in any separate agreement, such as pure rental agreements, should not be included in the scope of this Directive, given that they do not involve any possible transfer of property by the end of the contract.(20)Moreover, all credit agreements up to EUR 100000 should be included in the scope of this Directive. The upper threshold of credit agreements set out in this Directive should be higher than the one set out in Directive 2008/48/EC in order to take into account the indexation for the effects of inflation since 2008 and for the coming years.(21)In the case of credit agreements which provide for arrangements between the creditor and the consumer in respect of deferred payment or of repayment methods, where the consumer is already in default or is likely to default on the initial credit agreement, when such arrangements are likely to avert the possibility of legal proceedings concerning the default and their terms are not less favourable than those laid down in the initial credit agreement, Member States should be able to decide to apply only a limited number of provisions of this Directive, inter alia exempting creditors from the obligation to perform a creditworthiness assessment. This is not to prevent consumers in payment difficulty to get a new credit agreement that would help them to repay their initial credit more easily. Consumers would be considered likely to default for instance in situations where they lost their job.(22)Since 2008, crowdfunding has developed as a form of finance available to consumers, typically for small expenses or investments. A provider of crowdfunding credit services operates a digital platform open to the public in order to match or facilitate the matching of prospective lenders, acting in the course of their trade, business or profession or not, with consumers that seek funding. Such funding could take the form of consumer credit. Where providers of crowdfunding credit services directly provide credit to consumers, the provisions of this Directive concerning creditors should apply to them. Where providers of crowdfunding credit services facilitate the granting of credit between creditors acting in the course of their trade, business or profession, and consumers, the obligations for creditors under this Directive should apply to those creditors. In such a situation, providers of crowdfunding credit services act as credit intermediaries, hence the obligations for credit intermediaries under this Directive should apply to them.(23)In the case of specific types of credit agreements to which only some provisions of this Directive are applicable, Member States should remain free to regulate, in their national law, such types of credit agreements as regards other aspects not harmonised by this Directive.(24)Agreements for the provision on a continuing basis of services or for the supply of goods of the same kind, where the consumer pays for them for the duration of their provision by means of instalments, may differ considerably, in terms of the interests of the contractual parties involved, and the modalities and performance of the transactions, from credit agreements covered by this Directive. Therefore, such agreements should not be regarded as credit agreements for the purposes of this Directive. Such agreements include, for example, an insurance contract where the insurance is paid for in monthly instalments.(25)Credit agreements covering the granting of credit secured by immovable property and credit agreements the purpose of which is to finance the acquisition or retention of property rights in land or in an existing or projected building, including premises used for trade, business or a profession, should be excluded from the scope of this Directive as such agreements are regulated by Directive 2014/17/EU of the European Parliament and of the CouncilDirective 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010 (OJ L 60, 28.2.2014, p. 34).. However, credits the purpose of which is the renovation of a residential immovable property involving a total amount above EUR 100000, and which are not secured either by a mortgage, or by another comparable security commonly used in a Member State on immovable property or by a right related to immovable property, should not be excluded from the scope of this Directive.(26)This Directive should apply irrespective of whether the creditor is a legal person or a natural person. However, this Directive should not affect the right of Member States to limit the provision of credit for consumers to legal persons only or to certain legal persons.(27)Certain provisions of this Directive should apply to credit intermediaries, which are natural and legal persons who, in the course of their trade, business or profession, for remuneration, present or offer credit agreements to consumers, assist consumers by undertaking preparatory work in respect of credit agreements or conclude credit agreements with consumers on behalf of the creditor.(28)Information to consumers, such as adequate explanations, pre-contractual information, general information and information on consultation of databases, should be provided free of charge. Special attention should be given to the needs of persons with disabilities.(29)This Directive respects fundamental rights and observes the principles recognised in particular by the Charter. In particular, this Directive fully respects the rights to the protection of personal data, to property, to non-discrimination, to protection of family and professional life, and to consumer protection pursuant to the Charter.(30)This Directive should be without prejudice to Regulation (EU) 2016/679 of the European Parliament and of the CouncilRegulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1). which applies to any processing of personal data carried out by creditors and credit intermediaries falling within the scope of this Directive, and in particular without prejudice to principles relating to the processing of personal data set out in Article 5 of that Regulation, including data minimisation, accuracy and purpose limitation.(31)Consumers who are legally resident in the Union should not be discriminated against on the ground of their nationality or place of residence, or on any ground as referred to in Article 21 of the Charter when requesting, concluding or holding a credit agreement within the Union. This is without prejudice to the possibility of offering different conditions of access to a credit where those different conditions are duly justified by objective criteria. Moreover, this should not be understood as creating an obligation for creditors or credit intermediaries to provide services in areas in which they do not conduct business.(32)Consumers should be protected against unfair or misleading practices, in particular with respect to the information provided by the creditor or credit intermediary, in line with Directive 2005/29/EC of the European Parliament and of the CouncilDirective 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council ("Unfair Commercial Practices Directive") (OJ L 149, 11.6.2005, p. 22).. That Directive continues to apply to credit agreements and works as a "safety net" ensuring that a high common level of consumer protection against unfair commercial practices can be maintained in all sectors, including by complementing other Union law.(33)Specific provisions should be laid down on advertising of credit agreements and on certain items of standard information to be provided to consumers in order to enable them, in particular, to compare different offers. Such standard information should be given in a clear, concise and prominent way by means of a representative example. The total amount of the credit and the repayment duration chosen by the creditor for such a representative example should correspond as much as possible to the characteristics of the credit agreement that the creditor advertises. The standard information should be shown upfront and saliently, in a clear way and in an engaging format. It should be clearly legible and adapted to take into account the technical constraints of certain media such as mobile telephone screens. On digital channels, part of the standard information in the representative example could be provided by means of clicking, scrolling or swiping. However, before accessing credit offers, consumers should be presented with all standard information to be included in advertising concerning credit agreements even in the case of clicking, scrolling or swiping. The standard information should also be clearly demarcated from any additional information pertained to the credit agreement. Temporary promotional conditions, such as a "teaser" rate with a lower borrowing rate for the initial months of the credit agreement, should be clearly identified as such. Consumers should be able to see all essential information at a glance, even when they watch it on the screen of a mobile telephone. The creditor’s and, where applicable, credit intermediary’s telephone number and email address should also be communicated to the consumer to enable him or her to contact the creditor or the credit intermediary quickly and efficiently.A ceiling should be provided where it is not possible to indicate the total amount of credit as the total sums made available, in particular where a credit agreement gives the consumer freedom of drawdown with a limitation with regard to the amount. The ceiling should indicate the upper limit of credit which can be made available to the consumer. In specific and justified cases, in order to improve consumer understanding of information disclosed in advertising of credit agreements where the medium used does not allow that information to be visually displayed, such as in radio advertising, the amount of information disclosed should be reduced. In addition, Member States should remain free to regulate information requirements in their national law regarding advertising of credit agreements which does not contain information on the cost of credit. In order to reduce instances of mis-selling of credit to consumers who are not able to afford it and to promote sustainable lending, advertising of credit agreements should contain, in all cases, a clear and prominent warning to make consumers aware that borrowing money costs money. In order to ensure a higher level of consumer protection, certain advertisements, such as those encouraging consumers to seek credit by suggesting that credit would improve their financial situation or specifying that registered credit in databases have little or no influence on the assessment of a credit application, should be prohibited. Member States should also be allowed to prohibit advertisements that they deem to be risky for consumers, such as those that highlight the ease or speed with which credit can be obtained.(34)A durable medium, including paper and interoperable, portable and machine-readable digital versions of documents, should allow information to be addressed personally to the consumer, it should enable the consumer to store information in a way that is accessible for future reference and for a period of time adequate for the purposes of the information, it should allow the unchanged reproduction of the information stored and it should ensure readability of the information so that the information can be read and referred to. Consumers should have the possibility to choose the type of durable medium on which to receive information at the pre-contractual stage and once the contract is concluded, and on which to notify their withdrawal. However, consumers should not be able to notify their withdrawal and to require creditors or, where applicable, credit intermediaries to provide information on types of durable medium that are not commonly used.(35)Advertising tends to focus on one or more products in particular, while consumers should be able to make their decisions in full knowledge of the range of credit products on offer. In that respect, general information plays an important role in educating the consumer in relation to the broad range of products and services available and the key features thereof. Consumers should therefore be able at any time to access general information on credit products available. This should be without prejudice to the obligation to provide consumers with personalised pre-contractual information.(36)In order to be able to make their decisions in full knowledge of the facts, consumers should receive adequate pre-contractual information, for careful consideration at their own leisure and convenience, in good time before and not at the same time as the conclusion of the credit agreement, including information on the conditions and cost of the credit and on their obligations, as well as adequate explanations thereof. This is to ensure that consumers have sufficient time to read and understand the pre-contractual information, compare offers and make an informed decision. Such a requirement should be without prejudice to Council Directive 93/13/EECCouncil Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ L 95, 21.4.1993, p. 29)..(37)Pre-contractual information should be provided through the Standard European Consumer Credit Information form set out in Annex I to this Directive. To help consumers understand and compare different offers, the key elements of the credit should be provided in a prominent way on the first page of that form, through which consumers should see all essential information at a glance, even on the screen of a mobile telephone. In case all of the key elements cannot be displayed in a prominent way on one page, they should be displayed in the first part of the Standard European Consumer Credit Information form on two pages at most. Information provided in that form should be clear, clearly legible and adapted to the technical constraints of certain media such as mobile telephone screens. It should be displayed in an adequate and suitable way on the different channels, to ensure that every consumer can access information on an equal basis and in line with Directive (EU) 2019/882 of the European Parliament and of the CouncilDirective (EU) 2019/882 of the European Parliament and of the Council of 17 April 2019 on the accessibility requirements for products and services (OJ L 151, 7.6.2019, p. 70)..(38)To ensure the greatest possible transparency and comparability of offers, pre-contractual information should, in particular, include the annual percentage rate of charge applicable to the credit, determined in the same way throughout the Union. As the annual percentage rate of charge can at this stage be indicated only through an example, such example should be representative. Therefore, it should correspond, for instance, to the average duration and total amount of credit granted for the type of credit agreement under consideration and, if applicable, to the goods purchased. When determining the representative example, the frequency of certain types of credit agreement in a specific market should also be taken into account. As regards the borrowing rate, the frequency of instalments and the capitalisation of interest, creditors should use their usual method of calculation for the consumer credit concerned. In the event that pre-contractual information is provided less than one day before the consumer is bound by any credit agreement or offer, the creditor and, where applicable, the credit intermediary should remind the consumer, between one and seven days after the conclusion of the contract or, where applicable, the submission of the binding credit offer by the consumer, of the possibility to withdraw from the credit agreement.(39)The total cost of the credit to the consumer should comprise all the costs, including interest, commissions, taxes, fees for credit intermediaries and any other fees which the consumer has to pay in connection with the credit agreement, except for notarial costs. Creditors’ actual knowledge of the costs should be assessed objectively, taking into account the requirements of professionalism laid down in this Directive.(40)Credit agreements in which a borrowing rate is periodically revised in line with changes occurring in a reference rate referred to in the credit agreement should not be regarded as credit agreements with a fixed borrowing rate.(41)Member States should remain free to maintain or introduce national provisions prohibiting the creditor from requiring the consumer, in connection with the credit agreement, to open a bank account or conclude an agreement in respect of another ancillary service, or to pay the expenses or fees for such bank accounts or other ancillary services. In those Member States where such combined offers are allowed, consumers should be informed before the conclusion of the credit agreement about any ancillary services which are compulsory in order for the credit to be obtained in the first place or on the terms and conditions marketed. The costs payable in respect of those ancillary services, in particular insurance premiums, should be included in the total cost of the credit. Alternatively, if the amount of such costs cannot be determined in advance, consumers should receive adequate information about the existence of costs at the pre-contractual stage. Creditors should be presumed to have knowledge of the costs of the ancillary services which they offer to the consumers themselves or on behalf of a third party, unless the price thereof depends on the specific characteristics or the situation of the consumers.(42)For specific types of credit agreements, however, it is appropriate, in order to ensure an adequate level of consumer protection without placing an excessive burden on creditors or, where applicable, credit intermediaries, to restrict the pre-contractual information requirements, taking into account the specific character of such types of credit agreements.(43)Consumers should be given comprehensive information before they conclude a credit agreement, regardless of whether or not a credit intermediary is involved in the marketing of the credit. Therefore, in general, the pre-contractual information requirements should also apply to credit intermediaries. However, where suppliers of goods or providers of services act as credit intermediaries in an ancillary capacity, it is not appropriate to impose on them the legal obligation to provide the pre-contractual information in accordance with this Directive. Suppliers of goods or providers of services may be deemed, for example, to be acting as credit intermediaries in an ancillary capacity if their activity as credit intermediaries is not the main purpose of their trade, business or profession. In those cases, a sufficient level of consumer protection is still achieved since the creditor should be responsible for ensuring that the consumer receives the full pre-contractual information, either from the credit intermediary, where the creditor and the credit intermediary so agree, or in some other appropriate manner.(44)Member States should have the possibility to regulate the potentially binding character of the information to be provided to the consumer prior to the conclusion of the credit agreement and the period of time during which the creditor is to be bound by it.(45)Despite the pre-contractual information to be provided, the consumer may still need additional assistance in order to decide which credit agreement, within the range of products proposed, is the most appropriate for his or her needs and financial situation. Therefore, Member States should ensure that before the conclusion of a credit agreement creditors and, where applicable, credit intermediaries provide such assistance in relation to the credit products which they offer to the consumer, by providing adequate explanations about the relevant information free of charge, including in particular the essential characteristics of the products proposed to the consumer in a personalised manner so that the consumer can understand the effects which they may have on his or her economic situation including legal and financial consequences that may result from improper performance of contractual obligations. Creditors and, where applicable, credit intermediaries should adapt the way in which such explanations are given to the circumstances in which the credit is offered and the consumer’s need for assistance, taking into account the consumer’s knowledge and experience of credit and the nature of individual credit products. Such explanations should not in themselves constitute a personal recommendation. Member States should be able to require creditors and, where applicable, credit intermediaries, to document in what form and when such explanations were provided to the consumer.(46)As highlighted in the Commission proposal for a Regulation laying down harmonised rules on artificial intelligence (Artificial Intelligence Act) published on 21 April 2021, artificial intelligence (AI) systems can be easily deployed in multiple sectors of the economy and society, including cross border, and can circulate throughout the Union. In this context, creditors and credit intermediaries, when personalising the price of their offers for specific consumers or specific categories of consumer on the basis of automated decision-making, should clearly inform consumers that the price presented to them is personalised on the basis of automated processing of personal data including inferred data, so that they can take into account the potential risks in their purchasing decision. Pursuant to Article 14(2), point (f) of Regulation (EU) 2016/679, creditors and credit intermediaries are also required to inform consumers who receive the offer about the sources of data used for the personalisation of the offer.(47)It is important to prevent practices, such as tying of certain products, which may induce consumers to enter into credit agreements which are not in their best interest, without however restricting product bundling which can be beneficial to consumers. Member States should, however, continue monitoring retail financial services markets closely to ensure that bundling practices do not distort consumer choice or competition. As a general rule, tying practices should not be allowed unless the financial service or product offered together with the credit agreement could not be offered separately as it is a fully integrated part of the credit, for example in the case of an overdraft facility. While, taking into account proportionality considerations, a creditor should be able to require the consumer to have a relevant insurance policy in order to guarantee repayment of the credit or to insure the value of the security, the consumer should have the opportunity to choose his or her own insurance provider. This should not prejudice the credit conditions set by the creditor, provided that the insurance policy of that provider has an equivalent level of guarantee as the insurance policy proposed or offered by the creditor. Moreover, Member States should have the possibility to standardise, wholly or in part, the cover provided by insurance contracts in order to facilitate comparisons between different offers for consumers who wish to make such comparisons. In order for the consumer to have additional time to compare insurance offers before purchasing an insurance policy, Member States should require that the consumer is given at least three days to compare insurance offers related to the credit agreement, without the offer being changed, and the consumer is informed thereof. Consumers should be able to conclude an insurance policy prior to the expiry of that three-day period if they explicitly so request.(48)Because of their medical history, many cancer survivors in long-term remission often experience an unfair treatment in accessing financial services. They often face prohibitively high premiums, although they have been cured for many years, even decades. For the purpose of giving consumers who survived cancer equal access to insurance related to credit agreements, Member States should require that the insurance policies are not based on personal data concerning consumers’ diagnosis of oncological diseases after a relevant period of time following the end of the medical treatment of those consumers. Such period of time determined by the Member States should not exceed 15 years starting from the end of the medical treatment of the consumer.(49)Credit agreements and ancillary services should be presented in a clear and transparent manner. It should not be possible to infer the consumer’s agreement to conclude a credit agreement or to purchase ancillary services. Any such agreement by the consumer should be a clear affirmative act establishing a freely given, specific, informed and unambiguous indication of the consumer’s approval. In this context, silence, inactivity or default option such as pre-ticked boxes should not be considered to constitute agreement by the consumer.(50)Providing advice in the form of a personalised recommendation, that is to say advisory services, is an activity which may be combined with other aspects of granting or intermediating credit. Therefore, in order to be in a position to understand the nature of the services provided to them, consumers should be made aware of what constitutes such advisory services and of whether or not advisory services are being, or can be, provided. Given the importance which consumers attach to the use of the terms "advice" and "advisors", Member States should be allowed to prohibit the use of those terms, or of similar terms, where such advisory services are being provided to consumers by creditors or credit intermediaries. It is appropriate to ensure that Member States impose safeguards where advice is described as independent to ensure that the range of products considered and remuneration arrangements are commensurate with consumers’ expectations of such advice. When providing advisory services, the creditors or the credit intermediaries should provide an indication of whether the recommendation will be based on only their own product range or on a wide range of products from across the market, so that the consumer can understand the basis on which the recommendation is made. Moreover, the creditor and the credit intermediary should provide an indication of the fee payable by the consumer for the advisory services or, where the amount cannot be established at the time of disclosure, the method used for its calculation. Advice should always be provided in the best interest of the consumer, by advisors informing themselves about the consumer’s needs and circumstances and recommending credit agreements suitable to the consumer’s needs, financial situation and personal circumstances, bearing in mind also the objective to minimise defaults and arrears. Moreover, a sufficiently large number of credit agreements in the advisor’s product range should be taken into consideration when providing advice.(51)Granting of credit that has not been solicited by the consumer may in some cases be associated with practices that are harmful to the consumer. In that regard, unsolicited granting of credit, including non-requested pre-approved credit cards sent to consumers, the unilateral introduction of a new overdraft facility or overrunning or the unilateral increase in the limit of a consumer’s overdraft, overrunning or credit card, should be prohibited. The unsolicited granting of credit in the form of off-premises contracts as defined in Article 2, point 8 of Directive 2011/83/EU of the European Parliament and of the CouncilDirective 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council (OJ L 304, 22.11.2011, p. 64). should also be prohibited. The prohibition on unsolicited granting of credit should not prevent creditors and credit intermediaries from advertising or offering credit in the course of a commercial relationship in compliance with Union law on consumer protection and with national measures in compliance with Union law, including advertising and offering credit at the point of sale to finance the purchase of a good or a service.(52)It is possible for Member States to offer consumers the possibility to pursue proportionate and effective remedies against creditors or credit intermediaries in the event of non-compliance with this Directive in accordance with national law. Those remedies could entail compensation for damages and a reduction in the total cost of the credit to the consumer or the termination of the credit agreement.(53)Member States should take appropriate measures to promote responsible practices during all phases of the credit relationship, taking into account the specific features of their credit market. It should be possible for those measures to include, for instance, the provision of information to, and the education of, consumers, including warnings about the risks related to default on payment and to over-indebtedness. In an expanding credit market, in particular, it is important that creditors do not engage in irresponsible lending or give out credit without prior assessment of creditworthiness. Member States should carry out the necessary supervision to avoid such behaviour of creditors and should determine the necessary means to sanction such behaviour. Without prejudice to the provisions on credit risk of Directive 2013/36/EU of the European Parliament and of the CouncilDirective 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338)., creditors should bear the responsibility of checking individually the creditworthiness of the consumer. To that end, creditors should be allowed to use information provided by the consumer not only during the preparation of the credit agreement in question, but also during a long-standing commercial relationship. Consumers should also act with prudence and respect their contractual obligations.(54)It is essential that the consumer’s ability and propensity to repay the credit is assessed and verified before a credit agreement is concluded. That assessment of creditworthiness should be proportionate and done in the interest of the consumer, to prevent irresponsible lending practices and over-indebtedness, and should take into consideration all necessary and relevant factors that could influence a consumer’s ability to repay the credit. The repayment schedule should be tailored to the consumer’s specific needs and repayment capacity. In cases where the credit application is submitted jointly by more than one consumer, the creditworthiness assessment could be performed on the basis of the joint repayment capacity. A positive assessment should be without prejudice to the freedom of contract of the creditor in relation to the granting of credit. Member States should be able to issue additional guidance on additional criteria and methods to assess a consumer’s creditworthiness, for example by setting limits on loan-to-value or loan-to-income ratios.(55)The assessment of creditworthiness should be based on information on the financial and economic situation. Such information should be necessary and proportionate to the nature, duration, value and risks of the credit for the consumer, in line with the data minimisation principle set out in Regulation (EU) 2016/679, and should be relevant, complete and accurate. That information should include at least the income and expenses of the consumer, including giving appropriate consideration to the consumer’s current obligations, inter alia the living expenses of the consumer and the consumer’s household, as well as the consumer’s financial liabilities. That information should not include special categories of personal data referred to in Article 9(1) of Regulation (EU) 2016/679, such as health data including cancer data, nor information obtained from social networks. The European Banking Authority Guidelines of 29 May 2020 on loan origination and monitoring provide guidelines on what categories of data may be used for the processing of personal data for creditworthiness purposes, which include evidence of income or other sources of repayment, and information on financial assets and liabilities or on other financial commitments. Consumers should provide information about their financial and economic situation in order to facilitate the creditworthiness assessment. Credit should only be made available to the consumer where the result of the creditworthiness assessment indicates that the obligations resulting from the credit agreement are likely to be met in the manner required under that agreement. When assessing the consumer’s ability to meet his or her obligations under the credit agreement, the creditor should take into account relevant factors and specific circumstances, for example, but not limited to, in the case of credit granted in accordance with this Directive to finance studies or to cover exceptional health care expenses, the existence of sufficient evidence that such credit will bring the consumer future incomes, or the existence of collateral or other forms of guarantees that the consumer could provide in order to secure the credit.(56)The Commission proposal for a Regulation laying down harmonised rules on artificial intelligence (Artificial Intelligence Act) establishes that AI systems used to evaluate the credit score or creditworthiness of natural persons should be classified as high-risk AI systems, since they determine those persons’ access to financial resources or essential services such as housing, electricity, and telecommunication services. In view of those high stakes, whenever the creditworthiness assessment involves automated processing, the consumer should have the right to obtain human intervention on the part of the creditor. Without prejudice to Regulation (EU) 2016/679, the consumer should have the right to obtain a meaningful, comprehensible explanation of the assessment made and of the functioning of the automated processing used, including the main variables, the logic and risks involved, as well as the right to express the consumer’s point of view and to request a review of the assessment of the creditworthiness and a review of the decision on whether to grant credit. The consumer should have the right to be informed about those rights after having duly received information on the procedure to follow. The possibility to request a review of the initial assessment and of the decision should not necessarily lead to the granting of credit to the consumer.(57)To assess the credit status of a consumer, the creditor should also consult credit databases. The legal and factual circumstances may require that such consultations vary in scope. To prevent any distortion of competition among creditors, those who are supervised and fully comply with Regulation (EU) 2016/679 should have access to private or public credit databases concerning consumers in a Member State where they are not established under non-discriminatory conditions compared with creditors established in that Member State. Member States should facilitate the cross-border access to private or public databases, in compliance with Regulation (EU) 2016/679. To enhance reciprocity, credit databases should as a minimum hold information on consumers’ arrears in repayment of the credit, on the type of credit and on the identity of the creditor, in accordance with Union and national law. Creditors and credit intermediaries should not process special categories of data, such as health data, referred to in Article 9(1) of Regulation (EU) 2016/679, nor information obtained from social networks, since neither those categories of data nor such information should be used for the purpose of assessing consumer creditworthiness. Credit databases providers should have processes in place to ensure that information contained in their databases is up-to-date and accurate. Where the credit application is rejected on the basis of a consultation of a database, creditors should inform consumers without undue delay and free of charge of the result of such consultation and of the details of the database consulted as well as the categories of data taken into account. Moreover, to ensure consumer awareness, Member States should ensure that consumers are informed about the registration of any credit repayment arrears in a database in a timely manner and within 30 days of the registration, for instance by sending them a warning via email asking them to access the database to view their own information regarding arrears in repayment of credit.(58)This Directive should not regulate contract law issues related to the validity of credit agreements. Therefore, in that area, the Member States should be able to maintain or introduce national provisions which are in conformity with Union law. Member States should be able to regulate the legal regime governing the offer to conclude the credit agreement, in particular when the offer is to be given and the period during which such offer is to be binding on the creditor. If such an offer is made at the same time as the provision of the pre-contractual information provided for in this Directive, such offer should, like any additional information the creditor may wish to give to the consumer, be provided in a separate document. That separate document could be annexed to the Standard European Consumer Credit Information form.(59)The credit agreement should contain all necessary information in a clear and concise manner to enable the consumer to know his or her rights and obligations under that agreement.(60)Without prejudice to Directive 93/13/EEC, and to pre-contractual obligations under this Directive, and in order to ensure a high level of consumer protection, the consumer should be presented, in due time and prior to any modifications to the terms and conditions of the credit agreement, with a description of the proposed changes and, where applicable, of the need for the consumer’s consent or an explanation of the changes introduced by operation of law; with the timescale for implementing those changes; and with the means for complaint available to the consumer as well as the time period for the consumer to lodge a complaint and the name and address of the competent authority where the complaint may be submitted. The modification of a credit agreement should not affect any consumer right, including information rights under this Directive. This should be without prejudice to Union law or national provisions regarding the admissibility, the conditions and the validity of contract modifications.(61)In order to ensure full transparency, the consumer should be provided with information concerning the borrowing rate, both at the pre-contractual stage and when the credit agreement is concluded. During the contractual relationship, the consumer should, furthermore, be informed of changes to the variable borrowing rate and changes to the payments caused by those changes. This should be without prejudice to provisions of national law not related to consumer information which lay down conditions for, or prescribe the consequences of, changes, other than changes concerning payments, in borrowing rates and other economic conditions governing the credit, for instance rules providing that the creditor may change the borrowing rate only where there is a valid reason for such change or that the consumer may terminate the credit agreement should there be a change in the borrowing rate or in other specific economic conditions concerning the credit.(62)Overdraft facilities and overrunning are increasingly common forms of consumer credit. Therefore, there is a need to regulate those financial products in order to increase the level of consumer protection and avoid over-indebtedness. There is a danger that consumers will not be able to pay if the creditors decide to request immediate refunds. Therefore, consumer rights in respect of overdraft facilities and overrunning should be laid down in this Directive.(63)In the event of a significant overrun exceeding a period of one month, the creditor should present the consumer without delay with information on the overrun, including the amount involved, the borrowing rate and any applicable penalties, charges or interest on arrears. In the case of regular overrunning, the creditor should offer the consumer advisory services, where available, to help the consumer identify less expensive alternatives, and redirect the consumer towards debt advisory services.(64)Consumers should have a right of withdrawal without penalty and with no obligation to provide justification. However, in order to increase legal certainty, the withdrawal period should in any event expire 12 months and 14 days after the conclusion of the credit agreement if the consumer has not received the contractual terms and conditions and information in accordance with this Directive. The withdrawal period should not expire if the consumer has not been informed about his or her right of withdrawal.(65)Where a consumer withdraws from a credit agreement in connection with which the consumer has received goods, in particular from a purchase in instalments or from a hiring or leasing agreement providing for an obligation to purchase, this Directive should be without prejudice to any regulation by Member States of questions concerning the return of the goods or any related questions.(66)In some cases, national law already provides that funds cannot be made available to the consumers before the expiry of a specific deadline. In those cases, consumers may wish to ensure that they receive the goods or services purchased early. Therefore, in the case of linked credit agreements, Member States should have the possibility to exceptionally provide that, if consumers explicitly wish early receipt of the purchased goods or services, the deadline for the exercise of the right of withdrawal could be reduced so that it is the same as the deadline before which funds cannot be made available.(67)In the case of linked credit agreements, a relationship of interdependence exists between the purchase of goods or services and the credit agreement concluded for that purpose. Therefore, where the consumer exercises the right of withdrawal in respect of the purchase agreement, based on Union law, the consumer should no longer be bound by the linked credit agreement. This should not affect national law applicable to linked credit agreements in cases where a purchase agreement has been voided or where the consumer has exercised his or her right of withdrawal based on national law. Nor should this affect the rights of consumers granted by national law according to which no commitment may be entered into between a consumer and a supplier of goods or a provider of services, nor any payment made between those persons, as long as the consumer has not signed the credit agreement to finance the purchase of goods or services.(68)The contracting parties should have the right to effect a standard termination of an open-end credit agreement. In addition, where agreed in the credit agreement, the creditor should have the right to suspend the consumer’s right to draw down on an open-end credit agreement for objectively justified reasons. Such reasons may include, for instance, suspicion of an unauthorised or fraudulent use of the credit or a significantly increased risk of the consumer being unable to fulfil his or her obligation to repay the credit. This Directive should not affect national contract law regulating the rights of the contracting parties to terminate the credit agreement on the basis of a breach of contract.(69)Under certain conditions, the consumer should be allowed to pursue remedies against the creditor in the event of problems related to the purchase agreement. However, Member States should determine to what extent and under what conditions the consumer is required to pursue those remedies against the supplier of goods or the provider of services, in particular by bringing an action against the supplier of goods or the provider of services, before being in a position to pursue them against the creditor. Consumers should not be deprived of their rights under national law attaching joint and several liability to the supplier of goods or the provider of services and to the creditor.(70)The consumer should have the right to discharge his or her obligations before the date agreed in the credit agreement. As interpreted by the Court of Justice of the European Union in the Lexitor rulingJudgment of the Court of Justice of 11 September 2019, Lexitor, C-383/18, ECLI:EU:C:2019:702., the right of the consumer to a reduction in the total cost of the credit to the consumer in the event of early repayment of the credit includes all the costs imposed on the consumer. The reduction in the total cost of the credit to the consumer should be proportionate to the remaining duration of the credit agreement and should also include costs which are not dependent on the duration of that credit agreement, including those which are fully exhausted at the time of granting the credit. However, taxes and fees applied by and directly paid to a third party and which are not dependent on the duration of the credit agreement should not be taken into consideration when calculating the reduction, as those costs are not imposed by the creditor and cannot therefore be unilaterally changed by the creditor. However, fees charged by a creditor to the benefit of a third party should be taken into consideration when calculating the reduction. In the case of early repayment, the creditor should be entitled to a fair and objectively justified compensation for the costs directly linked to the early repayment, taking into account also any savings thereby made by the creditor. However, in order to determine the method of calculating the compensation, it is important to comply with several principles. The calculation of the compensation due to the creditor should be transparent and comprehensible to consumers already at the pre-contractual stage and in any case during the performance of the credit agreement. In addition, the calculation method should be easy for creditors to apply, and supervisory control of the compensation by the competent authorities should be facilitated. Therefore, and due to the fact that consumer credit is, given its duration and volume, not financed by long-term funding mechanisms, the ceiling for the compensation should be fixed in terms of a flat-rate amount. This approach reflects the specific nature of consumer credits and should not prejudice the approach in respect of other products which are financed by long-term funding mechanisms, such as fixed-rate mortgage loans.(71)Member States should have the right to provide that compensation for early repayment may be claimed by the creditor only on condition that the amount repaid over a 12-month period exceeds a threshold defined by Member States. When fixing that threshold, which should not exceed EUR 10000, Member States should take into account the average amount of consumer credits in their market.(72)In order to promote the establishment and functioning of the internal market and to ensure a high degree of protection for consumers throughout the Union, it is necessary to ensure the comparability of information relating to annual percentage rates of charge throughout the Union.(73)The fixing of caps on borrowing rates, on annual percentage rates of charge or on the total cost of the credit to the consumer is a common practice in a number of Member States. Such capping system has proved beneficial in protecting consumers from excessively high borrowing rates, annual percentage rates of charge or total cost of credit to the consumer. In that respect, Member States should be able to maintain their current legal regime. In an effort to increase consumer protection without imposing unnecessary limits on Member States, adequate measures, such as caps or usury rates, should exist to effectively prevent abuse and to ensure that consumers are not charged with excessively high borrowing rates, annual percentage rates of charge or total cost of credit to the consumer.(74)To ensure transparency, the Commission should make such measures introduced by Member States publicly available, in a concise and clear form.(75)There are substantial differences in the laws of the various Member States with regard to the conduct of business in the granting of credit agreements. While recognising the diversity in the types of actor involved in credit intermediation, certain standards at Union level are essential in order to ensure a high level of professionalism and service.(76)The applicable Union framework should give consumers the confidence that creditors and credit intermediaries take account of the interests of the consumer, including their possible vulnerability and difficulties in understanding the product, based on the information available to the creditor or the credit intermediary at the relevant time and on reasonable assumptions about risks to the consumer’s situation over the term of the proposed credit agreement. A key aspect of ensuring such consumer confidence is the requirement to ensure a high degree of fairness, honesty and professionalism in the industry, which also includes responsible behaviour to avoid practices that have a negative impact on consumers, and appropriate management of conflicts of interest including those arising from remuneration, as well as to give advice in the best interests of the consumer.(77)It is appropriate to ensure that the relevant staff of creditors and credit intermediaries possess an adequate level of knowledge and competence in order to achieve a high level of professionalism. It should, therefore, be required that creditors and credit intermediaries prove relevant knowledge and competence at the level of the company, based on the minimum knowledge and competence requirements. Member States should be free to introduce or maintain such requirements applicable to individual natural persons, and to adapt the minimum knowledge and competence requirements to the different types of creditors and credit intermediaries, in particular when they act in an ancillary capacity. For the purpose of this Directive, staff directly engaged in activities under this Directive should include both front- and back-office staff, including management and, where appropriate, members of the board of creditors and credit intermediaries, who fulfil an important role in the credit agreement process. Persons fulfilling support functions which are unrelated to the credit agreement process, including human resources and information and communications technology personnel, should not be considered as staff under this Directive. Member States should put in place measures to support raising awareness of the requirements of this Directive in small and medium-sized enterprises that are creditors or credit intermediaries and facilitating their compliance, such as information campaigns, user guides and employee training schemes.(78)In order to increase the ability of consumers to make informed decisions about borrowing and managing debt responsibly, Member States should promote measures to support the education of consumers in relation to responsible borrowing and debt management, in particular relating to credit agreements for consumers, as well as to general budget management. Such an obligation could be fulfilled taking into account the financial competence framework developed by the Union together with the Organisation for Economic Co-operation and Development. It is particularly important to provide guidance for consumers taking out, particularly by means of digital tools, consumer credit for the first time. In that regard, the Commission should identify examples of best practices to facilitate the further development of measures to enhance consumers’ financial awareness. The Commission could publish such examples of best practices in coordination with similar reports drawn up in relation to other Union legislative acts. In creating and promoting those measures, Member States should consult relevant stakeholders, including consumer organisations. Such an obligation should not prevent Member States from providing for additional financial education.(79)Given the significant consequences of the enforcement proceedings for creditors and consumers and potentially for financial stability, it is necessary for creditors to deal proactively with emerging credit risk at an early stage and to put in place necessary measures to ensure that they exercise, where appropriate, reasonable forbearance before enforcement proceedings are initiated. When deciding whether it is appropriate to exercise forbearance measures, or whether it is justified to offer them reiteratively, the creditor should take into account, among other elements, the individual circumstances of the consumer, such as the consumer’s interests and rights, his or her ability to repay the credit and his or her reasonable needs for living expenses, and the creditor should limit the costs for the consumer in the event of default. In particular, when the consumer does not respond to the creditor’s offer within a reasonable period of time, the creditor should not be required to offer forbearance measures reiteratively. Member States should not prevent the parties to a credit agreement from expressly agreeing that the transfer to the creditor of goods covered by a linked credit agreement or of proceeds from the sale of such goods is sufficient to repay the credit.(80)When forbearance measures are deemed appropriate, they should include a modification of the terms and conditions of the initial credit agreement and could among others include a total or partial refinancing of a credit agreement. The modification of those terms and conditions could include, among others: extending the term of the credit agreement; changing the type of the credit agreement; deferring payment of all or part of the instalment repayment for a period; reducing the borrowing rate; offering a payment holiday; partial repayments; currency conversion; and partial forgiveness and debt consolidation. When forbearance measures are deemed appropriate, creditors should not be required to perform a creditworthiness assessment when modifying the terms and conditions of the credit agreement, unless the total amount payable by the consumer is significantly increased when modifying those terms and conditions. While the obligation to exercise forbearance measures should be without prejudice to procedures under national rules on enforcement proceedings, Member States should ensure that the forbearance measures provided for in this Directive are properly applied.(81)Consumers facing difficulties in meeting their financial commitments stand to benefit from specialised help on managing their debts. Financial difficulties cover a wide variety of situations, for example among many others, having delayed the repayment of debt for more than 90 days. The objective of debt advisory services is to help consumers facing financial difficulties and guide them to repay, as far as possible, their outstanding debts, while maintaining a decent level of life and preserving their dignity. That personalised and independent assistance may include legal counselling, money and debt management as well as social and psychological assistance. The assistance should be provided by professional operators which are not creditors, credit intermediaries, providers of crowdfunding credit services, credit purchasers or credit servicers, and are independent from them. Member States should ensure that debt advisory services provided by independent professional operators are made available, directly or indirectly and with only limited charges, to consumers. Those charges should in principle only cover operating expenses and not place an unnecessary burden on the consumers who experience or might experience difficulties in meeting their financial commitments. Where possible, consumers facing difficulties in repaying their debts are referred to debt advisory services before the enforcement proceedings are initiated. Debt advisory services should be easily accessible for consumers, taking into account for example consumers’ place of residence and also their language. Member States remain free to maintain or introduce specific requirements for debt advisory services. Creditors have a role to play in preventing over-indebtedness through the early detection and support of consumers experiencing financial difficulties. For that reason, creditors should have processes and policies in place for the detection of such consumers to ensure they can effectively refer them to easily accessible debt advisory services.(82)In order to ensure market transparency and stability, and pending further harmonisation, Member States should ensure that appropriate measures for the regulation or supervision of creditors are in place.(83)Member States should ensure that creditors and credit intermediaries, including non-credit institutions, are subject to an adequate admission process including an authorisation process or entering the non-credit institution in a register, and supervision arrangements by a competent authority. The requirement of an adequate admission process and of registration should not apply to credit institutions as defined in Article 4(1), point (1), of Regulation (EU) No 575/2013 of the European Parliament and of the CouncilRegulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1)., which are already subject to an authorisation process under Directive 2013/36/EU, nor to payment institutions as defined in Article 4, point (4), of Directive (EU) 2015/2366 of the European Parliament and of the CouncilDirective (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ L 337, 23.12.2015, p. 35)., for the services referred to in Annex I, point (4), of Directive (EU) 2015/2366, nor to electronic money institutions as defined in Article 2, point (1), of Directive 2009/110/EC of the European Parliament and of the CouncilDirective 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC (OJ L 267, 10.10.2009, p. 7)., for the granting of credit referred to in Article 6(1), first subparagraph, point (b), of Directive 2009/110/EC. This should be without prejudice to national admission processes and registration or supervision arrangements imposed on payment institutions and electronic money institutions for the purpose of granting credit to consumers and imposed on credit institutions for the purpose of credit intermediary activities in compliance with Union law.(84)Member States should be able to exempt from the requirements of admission and registration suppliers of goods or providers of services who qualify as micro, small and medium-sized enterprises as defined in Commission Recommendation 2003/361/ECCommission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (OJ L 124, 20.5.2003, p. 36).and who act as credit intermediaries in an ancillary capacity or who grant credit in the form of deferred payment for the purchase of goods and services offered by them, without any third party offering credit, if the credit is provided free of interest and charges, except for limited charges for late payments in accordance with national law. That possible exemption should not be used by large undertakings to avoid admission and registration requirements laid down in this Directive.(85)This Directive regulates only certain obligations of credit intermediaries in relation to consumers. Member States should therefore remain free to maintain or introduce additional obligations incumbent on credit intermediaries, including the conditions under which a credit intermediary may receive fees from a consumer who has requested that credit intermediary’s service.(86)Assignment of the creditor’s rights under a credit agreement should not have the effect of placing the consumer in a less favourable position. The consumer should also be properly informed when the credit agreement is assigned to a third party. However, where the initial creditor, in agreement with the assignee, continues to service the credit vis-à-vis the consumer, the consumer has no significant interest in being informed of the assignment. Therefore, a requirement at Union level that the consumer be informed of the assignment in such cases would be excessive.(87)Member States should remain free to maintain or introduce national rules providing for collective forms of communication where this is necessary for purposes relating to the effectiveness of complex transactions such as securitisations or liquidation of assets that take place in the compulsory administrative liquidation of banks.(88)Consumers should have access to adequate, prompt and effective alternative dispute resolution procedures for the settlement of disputes arising out of rights and obligations relating to credit agreements, using existing entities where appropriate. Such access is already ensured by Directive 2013/11/EU of the European Parliament and of the CouncilDirective 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR) (OJ L 165, 18.6.2013, p. 63). in so far as relevant contractual disputes are concerned. However, consumers should also have access to alternative dispute resolution procedures in the event of pre-contractual disputes concerning rights and obligations established by this Directive, for example in relation to pre-contractual information requirements, advisory services and creditworthiness assessment and also in relation to the information given by credit intermediaries which are remunerated by creditors and therefore have no direct contractual relationship with consumers. Such alternative dispute resolution procedures and the entities offering them should comply with the quality requirements established by Directive 2013/11/EU.(89)Member States should designate competent authorities empowered to ensure the enforcement of this Directive and should ensure that those competent authorities are granted investigation and enforcement powers and have adequate resources necessary for the performance of their duties. Member States should also be able to grant product intervention powers to national authorities where credit products are detrimental to consumers and need to be withdrawn. Member States should consider data on monthly default rates associated with different types of consumer credit products relevant to the scope of this Directive. Competent authorities of different Member States should cooperate with each other whenever necessary for the purpose of carrying out their duties under this Directive.(90)Member States should lay down rules on penalties applicable to infringements of national provisions adopted pursuant to this Directive and should take all measures necessary to ensure that they are implemented. While the choice of penalties remains within the discretion of the Member States, the penalties provided for should be effective, proportionate and dissuasive. Member States should notify the Commission of those rules and of those measures and should notify it, without delay, of any subsequent amendment affecting them.(91)Current national rules on penalties differ significantly across the Union. In particular, not all Member States ensure that effective, proportionate and dissuasive fines can be imposed on traders responsible for widespread infringements, or widespread infringements with a Union dimension. In certain cases, those traders can also be a group of companies. To ensure that Member States’ authorities can impose effective, proportionate and dissuasive penalties in relation to widespread infringements, and to widespread infringements with a Union dimension, that are subject to coordinated investigation and enforcement measures in accordance with Regulation (EU) 2017/2394 of the European Parliament and of the CouncilRegulation (EU) 2017/2394 of the European Parliament and of the Council of 12 December 2017 on cooperation between national authorities responsible for the enforcement of consumer protection laws and repealing Regulation (EC) No 2006/2004 (OJ L 345, 27.12.2017, p. 1)., fines should be introduced as an element of the penalties for such infringements.(92)To enhance transparency and consumer confidence, competent authorities should be allowed to disclose to the public any administrative penalty that is imposed for infringement of measures adopted pursuant to this Directive, unless such disclosure would seriously jeopardise the financial markets or cause disproportionate damage to the parties involved.(93)The efficient functioning of this Directive needs to be reviewed, together with the progress on the establishment of an internal market with a high level of consumer protection for credit agreements. Every four years, the Commission should undertake an evaluation of this Directive to assess the upper threshold of EUR 100000 laid down in this Directive and the percentages used to calculate the compensation payable in the event of early repayment, as well as an assessment of whether the scope of this Directive remains appropriate in relation to credit agreements which are secured by non-residential immovable property. That evaluation should also include an analysis of the evolution of the market for consumer credits that support the green transition and an assessment of the need for further measures to improve the uptake of such credits, as well as an assessment of the implementation of penalties imposed in accordance with this Directive and in particular of their effectiveness and deterrent effect. When evaluating this Directive, the Commission should analyse the economic trends in the Union and the situation in the market concerned, such as the emergence of new forms of financial services, digital trends, and volumes and trends of the cross-border provision of credits. It should also look at the efficiency of this Directive, including the costs and benefits it entails for businesses and consumers. Moreover, crowdfunding is increasingly a form of finance available to consumers, typically for small expenses or investments. Regulation (EU) 2020/1503 of the European Parliament and of the CouncilRegulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European crowdfunding service providers for business, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937 (OJ L 347, 20.10.2020, p. 1). excludes from its scope crowdfunding services, including those facilitating the granting of credit, that are provided to consumers. The Commission should assess the need for further measures to protect consumers seeking to take out a credit or to invest through a provider of crowdfunding credit services.(94)Since the objective of this Directive, namely the establishment of common rules for certain aspects of the laws, regulations and administrative provisions of the Member States concerning consumer credit, cannot be sufficiently achieved by the Member States considering market developments in the light of digitalisation and the goal to facilitate cross-border credit provision but can rather be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve that objective.(95)In order to amend non-essential elements of this Directive, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of additional assumptions for the calculation of the annual percentage rate of charge. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-MakingOJ L 123, 12.5.2016, p. 1.. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.(96)In accordance with the Joint Political Declaration of 28 September 2011 of Member States and the Commission on explanatory documentsOJ C 369, 17.12.2011, p. 14., Member States have undertaken to accompany, in justified cases, the notification of their transposition measures with one or more documents explaining the relationship between the components of a directive and the corresponding parts of national transposition instruments. With regard to this Directive, the legislator considers the transmission of such documents to be justified.(97)Taking account of the number of amendments that need to be made to Directive 2008/48/EC due to the evolution of the consumer credit sector and in the interests of the clarity of Union legislation, that Directive should be repealed and replaced by this Directive.(98)The European Data Protection Supervisor was consulted in accordance with Article 42(1) of Regulation (EU) 2018/1725 of the European Parliament and of the CouncilRegulation (EU) 2018/1725 of the European Parliament and of the Council of 23 October 2018 on the protection of natural persons with regard to the processing of personal data by the Union institutions, bodies, offices and agencies and on the free movement of such data, and repealing Regulation (EC) No 45/2001 and Decision No 1247/2002/EC (OJ L 295, 21.11.2018, p. 39). and delivered an opinion on 26 August 2021OJ C 403, 6.10.2021, p. 5.,HAVE ADOPTED THIS DIRECTIVE: