Private Law Duties Deriving From EU Banking Regulation and its Individual Protection Goals

EU regulation both affects private law and increasingly relies on private law mechanisms to ensure its proper enforcement. Prominent examples are competition and capital markets regulation. In contrast, EU prudential regulation of commercial banking predominantly relies on public enforcement via supervisory authorities. This is astonishing given that the protection of individual bank customers emerges as a leitmotiv of EU banking regulation. CRD IV and CRR as the main legislative acts of EU commercial banking regulation strongly promote the goals of depositor and investor protection. More explicitly, the Consumer Credit Directive and the Consumer Mortgage Credit Directive introduced the duty of responsible lending towards consumers. Where the individual bank customer enjoys regulatory attention, but is not protected by public supervisory authorities, private law is best placed to fill the enforcement gap. In light of CJEU guidance, this contribution argues that the current EU banking regulation is open for and even requires private law remedies to enforce individual protection goals. Suitable instruments are contract interpretation, contract nullity and damages.

Systemic Usury and the European Consumer Credit Directive

Summary: Usury is a frequent occurrence in consumer credit markets and particularly affects low-income households. Although the term usury conjures images of a greedy individual consciously acting to exploit the weak bargaining position of another by deceitful and even fraudulent means, we consider it as a systemic issue: as a problem of social discrimination, where belonging to a group which is statistically discriminated against leads to entrapment in a chain of usurious credit and financial contracts. This paper reviews the economic rationale for usury legislation and evaluates the European Consumer Credit Directive 2008/48/EC in this context. It identifies systemic usury as the product of market failure: the most powerful explanations for which are monopoly power, where the consumer is locked in a bilateral credit relationship; discrimination through risk-based pricing, and negative externalities. Contrary to the main focus of the European Consumer Credit Directive, improved disclosure of contract terms and other relevant information to consumers at the point of contracting cannot address systemic usury in credit markets. Even fully informed consumers can be discriminated against and become trapped in a situation of bilateral monopoly. As a consequence, the Directive is found to be ineffective: it implicitly acknowledges usurious practices and products as legal and undermines the national fight against usury. The Directive must be reformed.

Eingeräumte Überziehungsmöglichkeit und geduldete Überziehung

Together with a current account and a debit or credit card, having an overdraft granted and tolerated is a basic element of financial services for consumers. The far-reaching and profound changes to the law on consumer loans connected to the implementation of the Consumer Credit Directive (2008/48/EC) resulted especially in the redefinition of the right to have an overdraft both granted and tolerated according to §§ 504 and 505 respectively of Germany’s civil code (Bürgerliches Gesetzbuch). In 2016, these reforms were supplemented by further changes to the law, which significantly altered the right to be given an overdraft and which resulted from the implementation of both the Mortgage Credit Directive (2014/17/EU) and the Payment Account Directive (2014/92/EU). Using these changes as a starting point, this study examines the legal dogmatic foundations of having an overdraft granted and tolerated in both a European and a national context. Subsequently, it conducts an empirical investigation into practical experiences with overdrafts, which is based on interviews with experts from both credit institutes from the three banking sectors and consumer advice agencies. As a result of this investigation, the author deals with the points at which the legal dogmatic foundations and the practical experiences overlap and differ by bringing together the diverging results of the study’s initial two main parts in both an academically interesting and innovative way. This book will not only appeal to those in academia, but also to those working in the fields of banking and consumer rights.

Pre-agreement assessment as a responsible lending tool in South Africa, the EU and Belgium: Part 2

Responsible lending has become a very pertinent issue on the agenda of credit regulators across the globe who seek to combat the causes of consumer over-indebtedness. In this context the use of "pre-agreement assessment" as a tool to filter out those instances where, based on a consumer's creditworthiness or ability to repay, credit should not be granted to such a consumer, is a feature common to the lending regimes of various jurisdictions. This contribution consists of two parts: Part 1 provides a critical discussion of the reckless credit provisions of the National Credit Act 34 of 2005. Part 2 details the responsible lending measures contained in the EU Consumer Credit Directive and the EU Mortgage Credit Directive and provides an appraisal of the responsible lending measures introduced by Belgium, being a jurisdiction that has always been very pro-active in the context of consumer credit protection.

Pre-agreement assessment as a responsible lending tool in South Africa, the EU and Belgium: Part 1

Responsible lending has become a very pertinent issue on the agenda of credit regulators across the globe who seek to combat the causes of consumer over-indebtedness. In this context the use of “pre-agreement assessment” as a tool to filter out those instances where, based on a consumer’s creditworthiness or ability to repay, credit should not be granted to such consumer, is a feature common to the lending regimes of various jurisdictions.This contribution consists of two parts: Part 1 provides a critical discussion of the reckless credit provisions of the National Credit Act 34 of 2005. Part 2 details the responsible lending measures contained in the EU Consumer Credit Directive and the EU Mortgage Credit Directive and provides an appraisal of the responsible lending measures introduced by Belgium, being a jurisdiction that has always been very pro-active in the context of consumer credit protection. Â