CCD2: What EU lenders need to know and how to prepare

Martijn Bos
Head of Policy, Europe

What is the CCD2?

The Consumer Credit Directive 2 (CCD2) is a refresh of long-standing EU legislation, aimed at protecting consumers when they access credit. Much like the transition from PSD to PSD2 in payments, CCD2 builds on the original Consumer Credit Directive by modernising how lenders extend credit. While the new directive still covers traditional credit, it now also extends to newer products like Buy Now, Pay Later (BNPL) and other micro-lending tools. 

This updated directive brings into scope a wider range of credit types, especially those that have grown in popularity but weren’t fully regulated under the original directive. This includes revolving credit lines and flexible financing tools offered by fintechs like Zilch or Affirm, as well as traditional institutions.

A critical feature of CCD2 is the requirement for creditworthiness assessments on all loans, even those under €200. For context, in BNPL forward markets like the Netherlands, average BNPL value is €97 per transaction. Enscoping all of these loans for creditworthiness assessments marks a shift towards better consumer protection. Lenders are now expected to conduct due diligence even for small loan amounts, previously considered too minor for more detailed scrutiny. It is also expected that loan defaults will drop sharply, as more consumers are given more appropriate loan limits.

How does CCD2 define creditworthiness?

CCD2 defines creditworthiness as a proportionate, forward-looking check of whether a consumer can meet repayments over the life of a loan. Under Article 18, lenders must base the assessment on verified financial data like income, expenses, and debts and not just behavioural or non-financial indicators. The outcome must show whether repayments are sustainable, reflect the credit type and risk, and be well-documented to demonstrate responsible lending.

Why is open banking the preferred approach?

Open banking data strengthens creditworthiness checks by offering real-time, verified insights into a consumer’s financial position. Transaction data offers a transparent view of income regularity, essential spending, debt repayments and signs of financial strain. This is key to CCD2’s focus on accuracy and sustainability. Because the data comes from regulated sources, it’s more reliable than self-reported info. It scales with risk, supports proportionality, and fills gaps in cross-border lending where credit bureaus vary. This makes it a stronger, more compliant way to assess repayment ability.

Why is it being implemented?

At its core, CCD2 is designed to protect consumers from taking on unaffordable debt. BNPL products have made credit more accessible, but there is growing concern that borrowers underestimate the cumulative impact of multiple microloans. CCD2 introduces safeguards to ensure borrowing remains proportional, fair and transparent.

There are three key drivers behind the directive:

1. Expansion of scope: BNPL and microloans are now included, ensuring all types of credit undergo creditworthiness checks.

2. Smarter assessments: Lenders can now use real-time data, such as open banking insights, to assess affordability without relying on traditional credit scores alone.

3. Consumer confidence: With stricter checks in place, borrowers can feel more secure that they’re only being approved for loans they can afford, helping prevent debt spirals.

When does it come into force?

CCD2 must be implemented into national legislation by 20th November 2025, with full compliance required by 20th November 2026. As with many EU directives, the final interpretation will vary by country, with some member states like Germany or France expected to introduce additional measures. However, it appears that open banking connections will remain a valid pathway for creditworthiness assessment across the EU

This adds to a fragmented regulatory landscape across Europe, meaning navigating local requirements can quickly become complex for cross-border lenders and fintechs. As regulation evolves, especially in complex markets like the EU, Plaid acts as a partner to help you navigate fragmented rules and streamline your approach to compliance.

What about the UK?

Although CCD2 is an EU directive and does not apply to the UK post-Brexit, the UK government is currently reviewing its Consumer Credit Act with a view to modernising it. While the timelines and final outcomes are still being determined, it's likely that similar protections will be introduced.

Plaid is actively monitoring these developments, and we're well-placed to help businesses align with both EU and UK requirements, now and in the future. To learn more about how Plaid can help you be compliant in the EU, get in touch.