Will the Directive 2014/17/EU on mortgage credit protect consumers in the next economic and/or financial crisis?

Abstract

The Directive 2014/17/EU on mortgage credit agreements for real estate properties (Mortgage Credit Directive or MCD) reflects the classic tension in the European Union (EU) between the goal of attaining a European single mortgage credit market and the obligation to provide a high level of consumer protection. The classic approach of EU law to solve the tension is to find a balance between those aims through the interaction of public/private law. The article starts with a summary of the most important choices done by the legislator (exante information duties and responsible credit) and essential consumer right. It follows with a critical assessment of the MCD. The methodology of this study is both descriptive and analytical, law is considered not only a normative system but also a set of policy instruments influenced by other disciplines (ie. economics). The findings lead both to optimism and to criticism. Although the European harmonization represents a further step ahead in the area of financial services and consumer protection, some critical questions are still forgotten or left aside. The most important question remains unanswered, whether the MCD will protect consumers when the next economic/financial crisis inevitably arrives. The implications are clear: more research and better policy are needed.