The Pre-contracting Process of a Consumer Credit Agreement in Spain

Disclosure obligations

On the one hand, the Consumer Credit Agreement (CCA) Law regulates the basic content of the publicity and the marketing materials that creditors in the Spanish market use, and reinforces the pre-contracting information duties of creditors and credit agents, whose breach would render a consumer credit agreement voidable by the consumer.

The pre-contracting information (which differs depending on the nature of the contract to be executed) must allow a consumer to assess different offers and make an informed decision on the formalization of a consumer credit agreement.

In order for consumers to be in a better position to compare different offers (regardless of whether the creditor is domiciled in Spain or in another Member State of the European Union), the CCA Law obligates creditors to provide an informational document in a specific format, which is intended to coincide with those used in all other countries that have transposed the Directive.

Solvency checks

On the other hand, creditors must, prior to entering into an agreement, assess the solvency of the relevant consumer, on the basis of, among other instruments, the information provided by the customer and by reviewing the solvency and credit record of the consumer in accordance with the Spanish personal data protection regulations. This new formal obligation imposed on creditors aims to contribute towards increasing the control of the credit market and avoiding over-leveraged consumers.

Once the above is fulfilled to the creditor’s satisfaction, the creditor is obligated to deliver to the consumer a document containing all the terms and conditions of the proposed agreement, which will qualify as a binding offer of the creditor for 14 calendar days.

Consumer assistance

Likewise, creditors must provide adequate explanations to consumers in order to enable a consumer to assess whether the proposed credit agreement is adapted to his or her needs and financial situation. Where appropriate, creditors must explain the pre-contractual information it will provide in accordance with the disclosure obligations, and the essential characteristics of the products proposed and the specific effects they may have on the consumer, including the consequences of default in payment by the consumer.

For further information on the pre-contracting process of a consumer credit agreement,