🎧 The new Consumer Credit Directive (CCD2) will significantly reshape established banking products. In the latest episode of “Alles Legal – Fintech-Recht kompakt”, Dr Florian Lörsch from Annerton explains the new obligations banks will face regarding overdraft facilities and tolerated overdrafts – and why institutions should start restructuring their lending and account processes now. – Tune in now!
New CCD2 Rules for Overdraft Facilities
CCD2 does not only affect traditional consumer loans and buy-now-pay-later models. Overdraft facilities will also become subject to significantly stricter regulation. In this episode, host Dana Wondra speaks with lawyer Dr Florian Lörsch about the practical implications for banks and fintech companies.
Under the new rules, banks will face enhanced information obligations. Customers must be informed at least monthly about balances, interest and repayments, replacing the previous quarterly information requirements.
Stricter Termination and Repayment Requirements
The directive also introduces new rules for terminating or reducing overdraft facilities. The notice period is now two months. Banks also will be required to notify consumers at least 30 days in advance before terminating or reducing an overdraft limit.
In addition, institutions must allow consumers to repay outstanding balances in twelve equal monthly instalments. As a result, overdraft facilities will increasingly be treated like regular consumer loans from a regulatory perspective.
Creditworthiness Assessments Become More Comprehensive
CCD2 also significantly tightens creditworthiness assessments. According to the explanatory memorandum accompanying the directive, banks will need to assess whether consumers would be capable of repaying a terminated overdraft facility within twelve months.
This marks a major shift away from simple salary-based models towards more comprehensive analyses of consumers’ income and expenditure.
New Obligations for Tolerated Overdrafts
The reform also affects tolerated overdrafts. Banks will need to identify earlier whether customers regularly or permanently exceed their account limits and adapt their monitoring and compliance processes accordingly.
The episode demonstrates how profoundly CCD2 will impact even long-established banking products and why banks and fintechs should start preparing their operational processes now.
About this podcast
Alles Legal – Fintech Recht Kompakt delivers sharp, weekly insights into legal and compliance matters in the world of banking. (in German only)
This podcast is a collaboration between Payment & Banking and PayTechLaw.
Each Wednesday, we unpack the legal developments shaping the financial world – clearly, concisely, and without the legal jargon.
Since 2021, PayTechLaw authors and Annerton attorneys have brought depth and clarity to complex topics.
Whether it’s PSD3, DORA, or FiDA – we provide the legal context you need.
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