Amendment to the Consumer Credit Act and the Fintech Sector: A Regulatory and Compliance Perspective

The ongoing legislative work on the amendment to the Consumer Credit Act forms part of a broader European trend aimed at strengthening consumer protection in the financial services market. 

National regulations implementing Directive (EU) 2023/2225 on consumer credit (CCD II) pose significant interpretative and operational challenges for market participants, including entities operating within the LendTech sector, and require appropriate legal and compliance preparedness.

Creditworthiness Assessment and the Principle of Proportionality

One of the key areas addressed by the proposed amendments is the clarification of obligations related to the assessment of consumers’ creditworthiness. The draft legislation provides for an extension of the scope of information to be taken into account when making credit decisions, which, from the regulator’s perspective, is intended to mitigate the risk of consumer over-indebtedness. 

At the same time, market participants emphasize that the practical implementation of these obligations must respect the principle of proportionality, particularly with regard to low-value and short-term financial products. 

Available market data indicate that lending institutions already apply stringent risk assessment and customer selection mechanisms, while the level of payment arrears has been steadily declining. Against this background, the question arises as to the optimal regulatory model- one that ensures a high level of consumer protection without unduly constraining the operation of lawful, supervised forms of financing.

Unintended Regulatory Consequences and the Informal Financial Market

The regulatory debate increasingly also addresses the issue of so-called unintended consequences of regulation. Industry and consumer organizations point out that overly restrictive requirements may result in the exclusion of certain consumers from the formal financial market, which in practice may undermine the protective objectives of the law. From a compliance perspective, this entails not only the implementation of new procedures, but also ongoing monitoring of their impact on portfolio structure and customer behavior.

Reports published by analytical institutions draw attention to the existence of informal forms of financing operating outside the regulated system, which are not subject to supervision or consumer protection standards.

In this context, a precise regulatory impact assessment and the alignment of national provisions with the EU regulatory framework are of particular importance, in order to ensure that the regulated market remains a viable and attractive alternative for consumers.

Compliance Challenges and the Regulatory Impact on the Fintech Sector

From the perspective of fintech entities, appropriate preparation for the entry into force of the new regulations will be critical. This includes, in particular, updating creditworthiness assessment models, internal documentation, decision-making processes, and customer communications. 

At the same time, the importance of transparency, auditability of decision-making algorithms, and compliance with other legal regimes- especially GDPR and forthcoming AI-related regulations – is steadily increasing. 

The amendment to the Consumer Credit Act should therefore be viewed not only as a regulatory challenge, but also as an impetus for further professionalization of the market. Properly designed and effectively implemented compliance frameworks may become a source of competitive advantage for fintech entities, strengthening consumer trust and contributing to the stability of the financial ecosystem as a whole. 

Regulatory and Compliance Support for the Fintech Sector

We advise fintech companies and financial institutions on regulatory analysis, implementation of new legal requirements and organisational readiness for legislative changes at both national and EU level. If the planned amendments to the Consumer Credit Act raise questions regarding their impact on your business model, decision-making processes or compliance obligations, we invite you to contact our legal team.