Proposed bill implementing Directive (EU) 2023/2225 on credit agreements for consumers adopted

RegCORE Client Alert | German Regulatory Developments

QuickTake

The consumer credit market has changed in the wake of digitalisation. Technological advances have significantly altered both supply and demand through the introduction of new products and the evolution of consumer behaviour. With the proposed bill passed on 3 September 2025 to implement the Consumer Credit Directive (EU) 2023/2225 (RegE)Available at: https://www.bmjv.de/SharedDocs/Gesetzgebungsverfahren/DE/2025_VerbraucherkreditRL.html.Show Footnote on consumer credit agreements (“Consumer Credit Directive”, CCD), Germany is transposing the new European Consumer Credit Directive into national law. The legislator thereby aims to establish high standards of consumer protection while at the same time fostering the development of the internal market. At the same time, regulatory gaps under the previous Directive 2008/48/EC are being closed.Directive (EU) 2023/2225 of the European Parliament and of the Council of 18 October 2023 on credit agreements for consumers and repealing Directive 2008/48/EC, available at: https://eur-lex.europa.eu/legal-content/DE/ALL/?uri=CELEX:32023L2225.Show Footnote

In recent years, the range of credit products available to consumers has evolved considerably and become more diverse. In the digital environment in particular, new credit products have been developed in recent years that are becoming increasingly widespread and are being used more and more by consumers. With the RegE, the legislator is responding to newer forms of credit such as microloans, interest-free financing and buy-now-pay-later (BNPL) schemes, and is creating a uniform, modern legal framework. The scope of consumer credit law now explicitly includes loans of up to EUR 200, interest-free and fee-free loans, short-term loans of up to three months and, explicitly, BNPL schemes.See recitals 15, 17 and 20 of Directive (EU) 2023/2225 of the European Parliament and of the Council of 18 October 2023 on consumer credit agreements and repealing Directive 2008/48/EC.Show Footnote Until now, BNPL schemes were often not covered by consumer credit law if they were either interest-free and fee-free or designed for very short terms, thus benefiting from the previous legal exceptions in Sect. 491 para. 2 clause 2 of the German Civil Code (Bürgerliches Gesetzbuch, BGB). In addition, the RegE provides for comprehensive extended information requirements, the abolition of the written form requirement in favour of the text form for general credit agreements for consumers, and a limitation of the right of withdrawal to a maximum of twelve months and 14 days. The requirements for creditworthiness assessment will be tightened and the interest rate limits developed by the Federal Court of Justice (Bundesgerichtshof, BGH) will be codified in law. The new regulations will come into force on 20 November 2026.

The Directive on credit agreements for consumers is being implemented in particular through amendments to the BGB, the Introductory Act to the German Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche, EGBGB), the German Banking Act (Kreditwesengesetz, KWG) and the Trade Regulation Act (Gewerbeordnung, GewO), as well as other laws. For creditors and intermediaries, this means a considerable need to adapt products, processes and compliance systems. Compared to the draft bill (Referentenentwurf, draft bill), the RegE provides clearer regulations for digital credit agreements for consumers, stricter requirements for creditworthiness assessments, a clear limitation of the withdrawal period and explicit implementation of case law on excessive interest rates. While the draft bill left open the question of whether digital contracts without a qualified electronic signature are permissible, the RegE now expressly clarifies that text form is sufficient for general credit agreements for consumers. The new regulations will require creditors and retailers to make significant adjustments, but creditors are likely to welcome the clarifications and simplifications regarding digital contracts.

To illustrate the scope of the new regulations, it is worth taking a closer look at the key points of the RegE.

Key findings from the RegE on the implementation of the Directive (EU) 2023/2225 on credit agreements for consumers

Dual strategy of the RegE

The RegE pursues a dual strategy: on the one hand, consumer protection standards are being harmonised and expanded, while on the other hand, regulatory control is being strengthened in order to prevent excessive debt.

Extension of the scope

This is particularly evident in the significant expansion of the scope of application of general consumer credit agreements. In future, loans of up to EUR 200, interest-free loans, short-term loans with terms of up to three months and BNPL in general will also be covered by the consumer protection provisions of the BGB.See Sect. 491 para. 2 clause 2 BGB in its current version and Sect. 491 para. 2 clause 2 BGB-new.Show Footnote This closes a regulatory gap that has previously led to considerable risks, particularly in e-commerce.See Recital 7 of Directive (EU) 2023/2225 of the European Parliament and of the Council of 18 October 2023 on credit agreements for consumers and repealing Directive 2008/48/EC.Show Footnote In future, BNPL will be subject to the regulations as soon as a payment obligation arises.

Extended information requirements

The pre-contractual information requirements pursuant to Article 247 §§ 3 et seqq. EGBGB-neu are being restructured and slightly expanded so that all obligations relevant to general consumer credit agreements for consumers are now explicitly listed. In addition, new standard forms for consumer and debt restructuring loans are being introduced, which summarise the essential information on the first page in order to significantly improve the overview for consumers.

Form requirements: Text form instead of written form

The RegE fundamentally changes Sect. 492 para. 1 clause 1 BGB: Whereas previously the written form was required for the conclusion of credit agreements for consumers, in future the text form will suffice for general credit agreements for consumers.See Sect. 492 para. 1 clause 1 BGB in its current version and Sect. 492 para. 1 clause 1 BGB-new.Show Footnote This expressly permits digital contracts to be concluded without a qualified electronic signature – a decisive step towards modernising consumer credit law, which takes into account the needs of e-commerce as well as consumers’ interest in simple and fast processes.

A “tacit” or purely passive consent by the consumer will also not be sufficient in future. The consumer must provide active and explicit consent.

Right of withdrawal

The revision of the right of withdrawal is also of great practical relevance. The previously unlimited right of withdrawal in the event of incorrect information is replaced in the RegE by an expiry period (Erlöschensfrist): in future, the withdrawal period should in any event expire 12 months and 14 days after the conclusion of the credit agreement.See Sect. 356b para. 2 BGB in its current version and Sect. 356b para. 2 clause 5 BGB-new.Show Footnote An unlimited right of withdrawal, which is currently legally possible, can thus be prevented in future. Currently, the withdrawal period only begins when the consumer has received the comprehensive mandatory information in accordance with Sect. 492 para.2 BGB. Due to changing legal opinions, this extensive information leads to situations in which consumers may be able to withdraw from credit agreements for consumers for an unlimited period of time. On the one hand, this creates additional legal certainty for creditors, but at the same time increases the requirements for correct and formally accurate withdrawal instructions.

Interest rate limits

The codification of the interest rate limits developed by BGH deserves special attention: the threshold for excessive credit interest rates, which was previously derived solely from Sect. 138 BGB, is now expressly integrated into consumer credit law and laid down in Sect. 492 para. 9 BGB-new.See Sect. 492 para. 9 BGB-new.Show Footnote This provides creditors with clearer guidelines, but at the same time narrows their scope for pricing.

Stricter creditworthiness assessments

The requirements for creditworthiness assessments are being tightened.See Sect. 505a para. 1 clauses 2 and 3 BGB-new.Show Footnote In future, creditors will have to assess the overall financial situation of consumers for all general credit agreements for consumers, including small loans of up to EUR 200 and BNPL credit agreements. The principle of proportionality applies here, meaning that for credit agreements of less than EUR 200, a reduced but always comprehensible assessment is sufficient.See Sect. 505b para. 2 BGB-new.Show Footnote

Sect. 18a KWG is also being amended accordingly: in future, credit institutions must have suitable strategies and procedures in place and document their review processes.See Sect. 18a para. 5 and 8c KWG-new.Show Footnote This increases the requirements for creditors, compliance and risk management to closely integrate with sales and IT. At the same time, the RegE emphasises the principle of proportionality: for credit agreements under EUR 200, the review effort may be reduced.See Sect. 18a para. 4 KWG-new.Show Footnote

New duty of forbearance

A new requirement is being introduced for creditors to accommodate consumers experiencing payment difficulties, for example through deferrals or instalment payment agreements.See Sect. 18a para. 8b KWG-new.Show Footnote Creditors will also be required to have procedures and strategies in place to identify consumers experiencing financial difficulties and to refer them to debt counselling services if they are unable to meet their financial obligations.See Sect.18a para. 8c KWG-newShow Footnote

Further amendments and new Sales Financing Supervision Act (Absatzfinanzierungsaufsichtsgesetz)

The reform is not limited to specific amendments to BGB and KWG but also includes numerous other legal adjustments. These include, in particular, amendments to the German Unfair Competition Act (UWG), the German Federal Data Protection Act (BDSG) and the German Price Indication Regulation (PAngV). This is supplemented by the creation of a new law on the supervision of consumer credit in the context of sales financing (Absatzfinanzierungsaufsichtsgesetz, AbsFinAG), which is intended to subject digital credit schemes such as buy-now-pay-later to comprehensive regulation.

Timeline

The law will come into force on 20 November 2026. This gives creditors only a one-year transition period to adapt their IT, processes and compliance.

Key considerations for practice

For creditors, retailers and intermediaries, RegE will result in a comprehensive and complex need for adjustment.

• Review of the product portfolio: The first step is to review the entire product portfolio to determine which types of credit will be classified as general credit agreements for consumers in future. In particular, BNPL schemes, short-term loans and previously free loans, which were less regulated in the past, are now subject to comprehensive consumer protection regulations. A complete compliance analysis is necessary here in order to identify early risks and avoid regulatory violations.
• Adaptation of contract and information documents: The next step is to adapt contract and information documents. Pre-contractual information must be prepared in a clearer, more transparent and digitally usable form in accordance with the new legal standards; the form “European Standard Information for Consumer Credit”See Annex 4 to Art. 247 § 2 EGBGB-new.Show Footnote must be used for this purpose.
• Documentation adjustments: Lenders should view the necessary changes not merely as an obligation, but also as an opportunity to bring their entire contractual and process landscape up to date and to implement other legal or technical adjustments at the same time.
• Adjustment of the withdrawal information: Withdrawal information must be precisely adjusted to the new expiry period of twelve months and 14 days.
• Revision of contract design and IT processes: With the elimination of the written form requirement, credit agreements can now be concluded in text form. Creditors should promptly review and adapt their contract processes and IT systems to ensure that credit agreements can be created, transmitted and documented in text form in a legally compliant manner. In particular, it must be ensured that the digital representation in the front end complies with legal requirements and that complete traceability is guaranteed. Purely passive consent (e.g. a pre-ticked box or silence) is not sufficient – what is required is the consumer’s active and explicit consent.
• Adaptation of creditworthiness assessment processes: Creditworthiness assessment is one of the most complex areas of reform. Creditors must design processes that ensure a comprehensible, proportionate, yet substantial credit assessment, even for microloans and BNPL schemes. This requires close integration of sales, risk management and compliance, as well as complete documentation. Sect. 18a KWG clarifies that credit institutions are obliged to have appropriate strategies and procedures in place; this includes, in particular, the use of forbearance in the event of payment difficulties before enforcement proceedings are initiated – an extension of supervisory powers with considerable compliance and documentation requirements. This expansion significantly increases expectations for careful process structuring and audit management.

Outlook

Directive (EU) 2023/2225 on consumer credit agreements creates a uniform legal framework across Europe that significantly strengthens consumer protection and supervision. While traditional banks can often rely on existing structures, buy-now-pay-later providers in particular face extensive adjustments - from creditworthiness assessments to the design of information requirements and contract terms. The new requirements will apply from 20 November 2026. Companies should therefore assess at an early stage whether their products, processes and documentation comply with the upcoming standards and use the necessary documentation updates as an opportunity to implement other required changes at the same time; what counts is active, explicit consent – not merely passive acquiescence. Acting now will not only ensure regulatory compliance but also trust and competitiveness in the market.

About us

PwC Legal is assisting a number of financial services firms and market participants in forward planning for changes stemming from relevant related developments. We have assembled a multi-disciplinary and multijurisdictional team of sector experts to support clients navigate challenges and seize opportunities as well as to proactively engage with their market stakeholders and regulators.

Moreover, we have developed a number of RegTech and SupTech tools for supervised firms, including PwC Legal’s Rule Scanner tool, backed by a trusted set of managed solutions from PwC Legal Business Solutions, allowing for horizon scanning and risk mapping of all legislative and regulatory developments as well as sanctions and fines from more than 2,500 legislative and regulatory policymakers and other industry voices in over 170 jurisdictions impacting financial services firms and their business.

Equally, in leveraging our Rule Scanner technology, we offer a further solution for clients to digitise financial services firms’ relevant internal policies and procedures, create a comprehensive documentation inventory with an established documentation hierarchy and embedded glossary that has version control over a defined backward plus forward looking timeline to be able to ensure changes in one policy are carried through over to other policy and procedure documents, critical path dependencies are mapped and legislative and regulatory developments are flagged where these may require actions to be taken in such policies and procedures.

The PwC Legal Team behind Rule Scanner are proud recipients of ALM Law.com’s coveted “2024 Disruptive Technology of the Year Award” and the “2025 Regulatory, Governance and Compliance Technology Award in 2025”.

If you would like to discuss any of the developments mentioned above, or how they may affect your business more generally, please contact any of our key contacts or PwC Legal’s RegCORE Team via de_regcore@pwc.com or our website.