In a pivotal moment for the Greek economy, where inflation and cost-of-living pressures are testing household resilience, the Ministry of Development is moving forward with a legislative initiative that promises to fundamentally reshape the consumer credit landscape. The new bill, placed under public consultation until June 29, is not merely a formal transposition of EU Directive 2023/2225, but a concerted effort to shield consumers from practices that often lead to the vicious cycle of over-indebtedness.
The End of Unregulated Interest Rates
Perhaps the most significant reform introduced by the bill is the imposition of a maximum cap on the Total Annual Real Interest Rate (APR) and the total cost of credit. Until now, many consumers faced exorbitant costs, particularly in micro-loans or credit card balances, where interest rates significantly exceeded market averages. Under the new regulation, these costs are limited, ensuring that borrowers do not end up paying multiples of their original principal due to hidden fees and usurious rates.
This intervention comes at a time when digital banking and new lending formats have made access to capital easier than ever, but also more perilous. The government seeks to balance the market's need for liquidity with social protection, recognizing that 'easy credit' can rapidly devolve into a social crisis if left unchecked.
Scrutinizing 'Buy Now, Pay Later' (BNPL)
One of the most innovative and simultaneously controversial aspects of the modern market is the 'Buy Now, Pay Later' model. The bill brings these services under much stricter supervision. Providers of these payment facilities will now be required to conduct thorough creditworthiness assessments of their customers, mirroring the obligations of traditional banks. This means consumers will no longer be able to accumulate small debts across various platforms without oversight—a practice that previously led to 'invisible' over-indebtedness.
Furthermore, a 14-day right of withdrawal without justification is established, providing consumers with the necessary 'cooling-off period' to cancel impulsive purchases they might not be able to afford. Transparency is bolstered through the Standard European Consumer Credit Information (SECCI) form, which must be provided to the customer before any contract is signed, clearly stating the final amount to be repaid.
Digital Transition and Consumer Rights
The bill accounts for technological advancements by permitting digital contract signatures while simultaneously setting boundaries against data misuse. Particular emphasis is placed on advertising transparency. Every promotional activity for a loan must mandatory include a representative example with the APR, ensuring consumers are not misled by 'low interest rates' that are actually accompanied by high commissions or hidden fees.
In cases of non-compliance, the bill provides for substantial administrative fines, which can reach up to 1 million euros or 4% of a company's annual turnover. This sends a clear signal to financial institutions and fintech firms that ethical conduct is not optional. The public consultation represents the final opportunity for market stakeholders and consumer organizations to submit their proposals before the text is finalized and tabled in Parliament.
The Macroeconomic Dimension
From an economic perspective, capping borrowing costs can be a double-edged sword. While it protects the consumer, it may lead banks to adopt more conservative lending policies, potentially excluding individuals with low credit scores from the formal credit market. However, the long-term stability of the financial system depends on the quality of loans rather than their quantity. Greece, having endured the traumatic experience of the 'red loans' (NPLs) crisis, must lead in creating a secure framework that promotes responsible borrowing.
