New Rules on Consumer Credit and Distance Marketing

Two new EU directives will alter the landscape of consumer lending across the digital market. The directives, known as CCD II and DMD II, will extend the scope of EU consumer credit law to products that are currently out of scope, as well as impose new conduct obligations on lenders. Under DMD II, online withdrawal rights will be mandatory, and rules on layering and presentation of information will be imposed. Lenders will need to take care when implementing the new requirements due to overlaps, particularly regarding withdrawal rights. Our Financial Regulation team explores the revised rules.

What you need to know

• Two significant new EU directives, CCD II and DMD II, will update consumer lending and distance marketing rules across the EU.
• Under CCD II, the scope of EU consumer lending law will be extended to cover credit up to €100,000, buy-now-pay-later products and leasing with an option to purchase. The format of the Standard European Consumer Credit Information document will be updated. Lenders will be subject to an obligation to conduct standard credit checking and to document affordability assessments.
• Meanwhile, under DMD II, online application and purchase functions will need to be matched by an equally accessible withdrawal function and there will be new rules regarding layering and presentation of information.
• Due to staggered implementation dates and overlap between the provisions of CCD II and DMD II, lenders will need to plan their implementation projects carefully to avoid cumbersome and costly two-step IT systems changes.

Consumer lending is set to receive a regulatory update under two new EU laws. The revised Consumer Credit Directive[1] (CCD II) and the revised Distance-Marketing of Consumer Financial Services Directive[2] (DMD II) will modernise the framework for online-based borrowing. The measures broaden the definition of consumer credit, impose data-driven affordability duties and require user-interface parity, so that withdrawal is as simple as acceptance.

The Consumer Credit Directive

CCD II extends regulation to products previously outside the scope of EU credit law. The products entering scope include:

• Credit up to a value of €100,000 - previously the lower limit was €200 and the upper limit was €75,000
• Leasing with an option to purchase, and
• Most buy-now-pay-later arrangements

Under CCD II, consumers must receive key information via a streamlined Standard European Consumer Credit Information sheet before contract execution. In addition, CCD II mandates that creditors must consult relevant credit databases - in Ireland, this will be the Central Credit Register - before approving an in-scope loan. Lenders are also required to document a proportionate affordability assessment. The CCD II includes a further requirement that any adverse automated decision is subject to an optional human review.

Advertising that mentions costs will trigger a mandatory health warning and APR disclosure. These measures will introduce new pre-sale risk control measures which may directly impact Irish lenders’ existing practices.

Revised Distance-Marketing of Consumer Financial Services Directive

DMD II updates the EU Consumer Rights Directive to include additional rules for distance contracts for financial services. The DMD II seeks to ensure functional symmetry for financial services sold at a distance. For example, for every online “apply” or “buy” button there must be an equally accessible “withdraw from contract” function, capable of generating an immediate electronic acknowledgement.

Disclosures must be layered so that the most important terms appear on a consumer’s screen immediately before commitment. In tandem, practices such as hidden opt-outs and disappearing discounts are expressly prohibited.

Collectively, the CCD II and DMD II signal a shift from static documentation to dynamic, technology-led compliance. Financial institutions that adopt these design principles early can reduce future remediation costs and build consumer trust in an increasingly competitive digital market.

What's next - Ireland’s transposition

Ireland must transpose CCD II by 20 November 2025, although CCD II applies from 20 November 2026. The DMD II must be transposed slightly later, by 19 December 2025, yet its rules take effect five months earlier, on 19 June 2026. During that interim window, every consumer credit contract concluded at a distance will be governed by the DMD II. CCD II specific provisions on creditworthiness, advertising and early repayment will not be in force until November 2026.

This phased approach to implementation is likely to cause challenges among lenders. There are potential areas where it may not be straightforward to reconcile the DMD II provisions and CCD II provisions. Confusion is more likely to arise in the context of termination/withdrawal rights, where DMD II applies from June 2026 unless another EU financial services withdrawal rights regime applies instead. Since the withdrawal rights under CCD II will not apply until November 2026, it is arguable that contracts subject to CCD II will be entitled to DMD II withdrawal rights as from June 2026 until they are superseded by the CCD II withdrawal rights in November.

Sequential implementation could require financial institutions to implement two IT reconfigurations in quick succession – DMD II in June 2026, replaced by CCD II (where it overrides DMD II) in November 2026. Lenders are unlikely to wish to do this in practice, but in the absence of seeing the detailed transposition arrangements and/or CBI guidance, a compliant alternative could be difficult to find at this point.

Firms are advised to carefully assess the impact of complying with CCD II and DMD II, and to seek legal guidance to support a smooth transition. For more information or expert advice, please contact a member of our Financial Regulation team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] (EU) 2023/2225

[2] (EU) 2023/2673