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.

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

Part III Financial Sectors and Activities, 20 Home Finance Transactions

This chapter examines the regulatory regime for building societies in their capacity as lenders and for home finance transactions, which includes lending on mortgage secured on domestic property, home purchase business, and home reversion business. It begins with a discussion of the supervision and regulation of building societies before the Financial Services and Markets Act 2000 (FSMA) and under FSMA. It then considers some key developments relating to the regulation of mortgage and home finance business, including the European Commission's introduction of the Mortgage Credit Directive and the replacement of the Financial Services Authority by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). The chapter also analyses the regulation of the consumer buy to let mortgage business, home reversion plans, home purchase plans, and regulated sale and rent back agreements before concluding with a review of the Prudential Sourcebook for Mortgage and Home Finance Firms and Insurance Intermediaries.

Credit Intermediation under the 2014 European Mortgage Credit Directive: a Call for Targeted Rules on Intermediary Remuneration

In February 2014 the European legislator adopted a directive on credit agreements for consumers relating to residential immovable property, which had to be implemented by the member states by March 2016. This paper starts with some fundamentals on the policy objectives underlying this so-called „Mortgage Credit Directive” (MCD) and further provides an overview of the specific regulatory framework that has been developed for credit intermediaries. This serves as the starting point for an assessment of the level of consumer protection that has been established while regulating the activities of credit intermediaries. Particular risks for credit intermediaries’ clients stem from incentives caused by the way in which they are traditionally remunerated by consumers and/or creditors. Whereas information disclosure obligations included in the MCD are an insufficient means to mitigate some potentially harmful consequences of intermediary compensation, the authors argue for the introduction of targeted remuneration regulation.