New EU rules set to reshape consumer credit market by 2026, MACM warns

The Malta Association of Credit Management (MACM) has issued a notice to its members and the wider business community highlighting key updates to the EU’s Consumer Credit Directive.

First introduced in 2008 to regulate personal loans and other forms of consumer credit, the directive has now been revised under Directive (EU) 2023/2225 to address the rapidly evolving nature of credit products and consumer behaviour.

The new rules were published in October 2023 and must be transposed into Maltese law by 20th November 2025, taking full effect one year later in November 2026.

Wider scope – including ‘Buy Now, Pay Later’

A significant shift comes in the directive’s broadened scope. The revised rules will apply to all consumer credit agreements up to €100,000 – with no lower threshold – meaning even small, short-term loans are covered.

That includes ‘Buy Now, Pay Later’ (BNPL) schemes, even if they are interest-free or involve repayment terms of just a few months. Previously outside the directive’s remit, BNPL products have surged in popularity, particularly in the online retail sector.

Leasing agreements with an option to buy, as well as credit made available through crowdfunding platforms, are also now included under the directive for the first time.

Clearer, more transparent information

In response to new digital channels of borrowing, the directive emphasises clearer, standardised information. Lenders will be required to present loan details in the form of a ‘Standardised European Consumer Credit Information’ document, designed to be easily accessible on mobile devices.

The form must include essential information such as total borrowing costs, duration, interest rates, and the annual percentage rate (APR).

Stricter advertising and consent rules

Consumer protection measures are being strengthened in other areas as well. Advertising related to credit must be “fair, clear, and not misleading”, and must include warnings such as “borrowing money costs money”.

The directive also prevents lenders from ‘tying’ credit products to other services unless they are offered separately as well. Pre-ticked consent boxes or default opt-ins will be prohibited, ensuring that consumers actively agree to credit terms.

Greater emphasis on responsible lending

The rules mandate tougher creditworthiness assessments to prevent irresponsible or unaffordable lending. Lenders must verify income, existing commitments, and financial liabilities, and they can only approve a loan if a borrower is likely to meet their obligations.

Automated decision-making alone will not be enough: borrowers must be given the right to a “meaningful explanation” and access to human review if they are denied credit by automated means. The use of sensitive personal data, such as health records or social media activity, for making lending decisions has been explicitly banned.

Support for borrowers in difficulty

Creditors will also be required to provide support to consumers facing financial hardship and show reasonable forbearance before starting legal action.

Member States must also ensure the provision of independent debt advisory services that can assist consumers in difficulty. These services must be impartial and cannot be provided by lenders themselves.

MACM encourages credit data sharing

In its communication, MACM said it encourages lenders to cooperate and share credit information through its Secretariat, which can help assess creditworthiness effectively while complying with data protection laws.

The association stressed that it “takes the personal data of individuals very seriously” and remains aligned with GDPR and all other relevant directives.