Cap on charges for consumer loans and credit cards, stricter rules for digital financial services, mandatory intervention by lenders before a borrower falls into over-indebtedness, as well as a “right to be forgotten” for cancer patients are provided for in the draft law of the Ministry of Development that has been submitted for public consultation.

As Business Stories had already revealed in March, the draft law incorporates the new European Directives on consumer credit and distance financial services, significantly expanding consumer protection at a time when an increasing number of transactions are carried out via apps and digital platforms.

The bill is not limited only to traditional bank loans. It introduces rules for “Buy Now – Pay Later” purchases, microloans, credit provided by merchants, digital financial service contracts, and also includes provisions to address greenwashing and strengthen the right to repair products.

See HERE the full bill submitted for public consultation

Who the new framework concerns

The first major change is the significant expansion of the scope of the legislation. The new framework no longer covers only classic consumer loans and credit cards, but almost every form of consumer credit provided without collateral.

The provisions of the bill include credit cards, consumer loans, microloans even under 200 euros, credit provided directly by merchants, “buy now – pay later” programs, lease agreements with purchase option, as well as repair or renovation loans.

At the same time, the maximum threshold for application is increased to 100,000 euros, while a special exemption is provided for home renovation loans without collateral, even when they exceed this amount. In this way, the new regime now covers everything from a small app-based purchase to a large-scale home renovation.

Cap on charges and on total repayment amount

The most important intervention of the bill concerns the total cost of borrowing, as for the first time specific limits are set not only on charges but also on the final amount a borrower may be required to repay.

According to the draft law, the Ministry of Development will be able to set maximum limits on the Annual Percentage Rate of Charge (APR), while a cap is also introduced on the total amount paid by the consumer in relation to the original loan principal.

In particular, the accompanying explanatory note provides that – with the exception of credit cards – the total repayment amount may not exceed:

• by 60% the initial principal for loans up to 4 years,
• by 70% for loans from 4 to 8 years,
• by 75% for loans over 8 years.

In practice, if a consumer takes out a €10,000 loan with a three-year duration, the total amount to be repaid will not be allowed to exceed €16,000. Similarly, for a loan of the same value with a six-year duration, the maximum repayment amount will be €17,000, while for longer durations it will reach €17,500.

This measure aims to limit cases of excessive consumer burden from interest, fees, and other charges, especially in forms of credit where the real cost is not always easily understood by the borrower.

This intervention is one of the most significant changes introduced by the new framework, as it shifts the focus from the nominal interest rate to the actual total amount the consumer ultimately pays, regardless of how individual charges are structured.

End of “fine print” and misleading advertising

Strengthening transparency is the second main pillar of the bill. The new provisions establish stricter information rules before a credit agreement is concluded, so that consumers clearly understand the real cost, duration, and obligations they are undertaking.

For this purpose, standardized information forms are introduced, while any advertisement containing credit cost elements must present, in a clear, concise, and prominent way, the key information needed to compare different offers.

In practice, if a bank or other provider advertises a consumer loan with an attractive interest rate or low monthly installment, it must also clearly present the total cost of the credit, its duration, and the main charges, so that consumers can compare offers without needing to search for critical information in the “fine print” of contracts.

At the same time, the bill prohibits practices that may lead consumers to take out credit without adequate information or without clear expression of intent. This includes the prohibition of unsolicited credit provision, meaning the granting of a loan or credit limit without prior application and explicit consent from the consumer.

The new framework also links transparency with creditworthiness assessment, as lenders are required to carry out a substantial and documented evaluation before granting credit, assessing whether the consumer is actually able to service the requested financing.

This aims to reduce both misleading promotion of credit products and the risk of household over-indebtedness already at the stage of credit granting.

Intervention before the borrower reaches a dead end

Another important change concerns how cases of consumers beginning to experience repayment difficulties will be handled.

The bill abandons the logic of intervention only after the problem has escalated and introduces the obligation to take measures at an earlier stage. A special section provides that lenders must examine restructuring solutions before initiating enforcement proceedings in cases of borrower default.

In practice, this means that when a borrower starts struggling to meet obligations, creditors must consider solutions such as debt restructuring, extension of repayment duration, or other forms of relief, before the case escalates into more aggressive collection procedures.

For example, if a consumer begins to systematically delay loan installments or shows repeated difficulty in repayment, the lender must examine restructuring options before enforcement proceedings or other adverse measures are taken.

The Ministry considers that early intervention can reduce both over-indebtedness and the accumulation of new overdue debts, allowing consumers to return to a sustainable repayment path.

At the same time, financial education and public awareness measures are planned so that consumers better understand the risks and obligations associated with taking on credit.

Free debt advisory services

Particular emphasis is also placed on supporting consumers facing financial difficulties.

For this purpose, independent debt advisory services are foreseen, through competent bodies that will provide free guidance to citizens regarding available debt management options.

Thus, a consumer unable to service loan installments will not be limited to communication with the creditor but will be able to seek independent information and advice before making critical decisions on debt management.

This provision is one of the less publicized but most substantial interventions of the bill, as it shifts the focus from simple debt collection to prevention and early support for borrowers.

Loans with one “click” and cancellation with one “click”

Special emphasis is also placed on distance financial services, as more and more consumers take out loans, open credit lines, or access financing products without ever visiting a physical branch.

The bill incorporates the new European legislation on distance financial service contracts and provides stricter information obligations, enhanced consumer protection, and new rules for the digital interfaces through which these services are offered.

In practice, if a consumer applies for a loan via a bank app or concludes a financing agreement online, they must receive all key information in advance in a clear, readable, and digitally adapted form, so they can understand the product and the obligations they are taking on.

At the same time, additional protection is introduced against practices that could unfairly influence decision-making through digital platforms, as the new European approach places particular emphasis on controlling so-called “dark patterns”, meaning design choices that push users toward decisions they might not otherwise take.