Crunch time for consumer credit in Europe

The document examines how the cost-of-living crisis in Europe is driving vulnerable households toward risky, unregulated financial products like buy-now-pay-later schemes and crypto assets. It calls for EU policymakers to update the Consumer Credit Directive (CCD) and the Distance Marketing of Consumer Financial Services Directive (DMFSD) to include better creditworthiness assessments, advertising rules, and debt relief measures to prevent a debt spiral among low-income citizens.

• The cost-of-living crisis is increasing the vulnerability of European households, with approximately 60 percent of German households needing all available income for subsistence and 21 per cent of the total EU population at risk of poverty and social exclusion.
• There is a rising trend of Europeans using consumer credit to survive, with borrowing rates reaching 63 per cent in Greece, and between 36 per cent and 41 per cent in France, Italy, and Poland.
• Unregulated financial products, specifically buy-now-pay-later (BNPL) schemes and crypto assets, pose significant risks to vulnerable consumers. BNPL usage increased by 60 per cent between 2019 and 2021, often leading to late payment fees and credit score impacts for those with multiple debt obligations.
• The authors advocate for updating the Consumer Credit Directive (CCD) to bring small-value, unregulated credit products into scope and to mandate that creditors offer sustainable forbearance measures, such as interest rate reductions, before starting enforcement proceedings.
• The Distance Marketing of Consumer Financial Services Directive (DMFSD) requires updates to address digital risks and the lack of advertising rules, which previously allowed the aggressive mis-selling of crypto assets to unsuitable investors.

APA

Cuzzupe, B., & Norwood, P. (2023). Crunch time for consumer credit in Europe. Green European Journal. https://www.greeneuropeanjournal.eu/crunch-time-for-consumer-credit-in-europe/

Chicago

Cuzzupe, Ben, and Peter Norwood. Crunch time for consumer credit in Europe. Green European Journal, 2023. https://www.greeneuropeanjournal.eu/crunch-time-for-consumer-credit-in-europe/.

Wikipedia

{{cite press release |last1=Cuzzupe |first1=Ben |last2=Norwood |first2=Peter |title=Crunch time for consumer credit in Europe |publisher=Green European Journal |date=16 February 2023 |url=https://www.greeneuropeanjournal.eu/crunch-time-for-consumer-credit-in-europe/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{cuzzupe2023crunch, author = {Cuzzupe, Ben and Norwood, Peter}, title = {{Crunch time for consumer credit in Europe}}, publisher = {Green European Journal}, year = {2023}, month = feb, url = {https://www.greeneuropeanjournal.eu/crunch-time-for-consumer-credit-in-europe/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }