EU Banking and Financial law – Consumer credit – Consumer protection
Consumer protection – Consumer credit – Directive 2008/48/EC – Pre-contractual information duties – Obligation to check the borrower`s creditworthiness – Burden of proof – Methods of proof
Pursuant to Directive 2008/48/EC lenders, when contracting with consumers, bear responsibility for the pre-contractual information requirements laid down in the Directive. They must provide consumers with a “Standard European Consumer Credit Information” form, check individually the creditworthiness of the consumer and have a duty to assist the consumer by giving a personalised explanation if need be. The purpose of this Directive is to enable the consumer to make an informed choice as to the commitment to subscribe to a loan. But there are no provision rules relating to the burden of, or the detailed rules for, providing that the lenders` obligations have been fulfilled.
In this respect, the principle of effectiveness (which limits the procedural autonomy of the Member States) would be undermined if the burden of proving the non-performance of the lender`s obligations lay with the consumer. A diligent lender must be aware of the need to gather and retain evidence that its obligations to provide information and explanations have been fulfilled. A standard term according to which the borrower acknowledges that he has received and taken note of the “Standard European Information form” constitutes an indication which the lender is required to substantiate with one or more relevant items of evidence.
The consumer’s creditworthiness assessment (article 8 of the Directive 2008/48) may be carried out solely on the basis of information supplied by the consumer, provided that that information is sufficient and that mere declarations by the consumer are also accompanied by supporting evidence. Secondly, it does not require the lender to carry out systematic checks of the veracity of the information supplied by the consumer. The Directive 2008/48/EC affords the lender a margin of discretion for the purpose of determining whether or not the information at its disposal is sufficient. However, mere unsupported declarations made by the consumer may not, in themselves, be sufficient if they are not accompanied by supporting evidence. This requirement aims to making creditors accountable and to preventing them from granting loans to consumers who are not creditworthy.
Pursuant to article 5(6) of the Directive 2008/48, further to the provision of the “Standard European Consumer Credit Information” form (article 5(1), the lender must provide adequate and personalized explanations to the consumer in order to place him in a position where he is enabled to assess whether the proposed credit agreement is adapted to his needs and to his financial situation. Therefore, notwithstanding the pre-contractual information which must be provided under Article 5(1) of that Directive, the consumer may, pursuant to Article 5(6), before entering into the credit agreement, still need additional assistance. The Directive does not specify in what form this additional adequate explanations must be given to the borrower. Therefore, those explanations may be given orally by the lender to the consumer in the course of an interview. Those explanations must be communicated to the consumer in good time before the credit is signed. This requirement aims to enabling the consumer to make a fully informed decision with regard to a type of loan agreement.
Both articles 5 and 8 of the Directive 2008/48 are pre-contractual in nature. There is no link between the two obligations stemming from these two articles. As such, the assessment of the financial situations and the needs of the consumer may not be necessarily carried out before the provision of adequate explanations. The lender is in a position to give the consumer explanations based solely on information which the consumer supplies to him, so that the consumer may make a decision with regard to a type of loan agreement, without the lender being required to assess the consumer’s creditworthiness beforehand. However, the lender must take account of the assessment of the consumer’s creditworthiness in so far as that assessment means that the explanations provided need to be adapted.