BERLIN (dpa-AFX) – Individuals who excessively overdraw their accounts are set to receive better protection against forced collection measures in the future. This is according to a draft bill published on Monday by the Federal Ministry of Justice and Consumer Protection. Under the proposal, banks would no longer be able to terminate overdraft facilities with immediate effect; instead, a notice period of at least two months would be required. Moreover, before initiating forced collection to recover outstanding debts, lenders must offer customers the option to repay the amount in question in twelve equal monthly installments at the agreed interest rate.
No Cap on Overdraft Interest Rates
While overdraft credit provides short-term financial flexibility, it remains one of the most expensive forms of borrowing due to its comparatively high interest rates. According to the coalition agreement between the CDU, CSU, and SPD, the parties intend to examine "whether cost caps for basic account fees and overdraft interest rates are necessary to ensure reasonable, market-standard charges, or whether the current legal framework should remain unchanged."
This issue is not addressed in the draft presented by Federal Justice Minister Stefanie Hubig (SPD). The ministry states that a careful review is necessary to avoid overregulation, as this could potentially restrict access to overdraft credit. Since the EU Consumer Protection Directive must be transposed into national law by November 20, the ministry intends to address this matter separately.
Clear Information for Consumers
The draft also proposes that regulations designed to protect consumers will in future apply to interest-free loans and loans of less than 200 euros, as well as to so-called "buy-now-pay-later" models, where the purchase price is debited from the account at a later date. To prevent both providers and consumers from being overwhelmed, a concise, clearly structured information sheet containing all key details is planned for these cases.
No Use of Health Data for Credit Checks
In order to better protect consumers from over-indebtedness, new requirements for creditworthiness assessments are also being introduced. The draft stipulates that information from social networks and especially sensitive data – such as health data – may not be used in such assessments.
"Our goal is clear: more protection for consumers in credit agreements – without unnecessary bureaucratic burden," said Hubig. She noted that quickly concluded credit contracts can pose a risk in individual cases – "in the worst case, such contracts can lead to a debt trap."
