The national legal framework applicable to banks and financial institutions offering consumer lending products, including personal loans, overdrafts and credit cards, is being revised as detailed by the MFSA in its Circular published on the 20th of November 2025. The Circular provides an overview of the measures being implemented for the transposition of Directive (EU) 2023/2225 (commonly known as the Consumer Credit Directive II, the “CCD II”) into Maltese law. It is also pertinent to note that, as explained below, as a result of these changes, there will be a distinct set of regulations respectively applicable to banks and financial institutions offering consumer credit products.
With the overarching goal being the modernisation of consumer credit regulation across the EU, the CCD II (published on the 9th October 2023) repeals the original EU Directive 2008/48/EC (the Consumer Credit Directive I or the “CCD I”) and brings about the enhancement of consumer protection and lending practices. A detailed analysis of the changes introduced by the CCD II can be accessed here.
Legal and regulatory measures implementing the CCD II
The MFSA has notified that the following legal and regulatory instruments will be introduced or amended to reflect the CCD II provisions into the national framework:
1.The Banking Act (Consumer Credit) (Amendment) Regulations, 2025 which will:
- amend the recently published Banking Act (Consumer Credit) Regulations. The latter were published on the 18th of November 2025 by way of Legal Notice 265 of 2025 but are yet to enter into force (the application date is to be established in a separate set of regulations and determined by the Minister responsible for finance) and will complement the consumer credit regulations applicable to banks which are found in the MFSA’s Conduct of Business Rulebook for Credit Institutions Offering Retail Products (the “COBR”);1
- reflect certain provisions of the CCD II together with the MFSA’s powers vis-à-vis the implementation of the CCD II, insofar as these are applicable to banks.
2.The Financial Institutions Act (Consumer Credit) Regulations, 2025 which will:
- repeal and replace the Financial Institutions Act (Consumer Credit) Regulations, 2025 which were also issued on the 18th of November 2025 by way of Legal Notice 266 of 2025 and which are yet to enter into force (the application date will also be established under separate regulations by the Minister responsible for finance);
- transpose the CCD II provisions for financial institutions and will reflect the MFSA’s powers in respect of the implementation of such requirements in Malta vis-à-vis financial institutions;
3.The Consumer Credit Intermediaries (Admission) Regulations:
- in transposing the requirement under Article 37 of the CCD II, these regulations shall introduce the obligation to ensure that credit intermediaries are subject to an admission process and other requirements relating to such admission; and
4.A revised version of the MFSA’s COBR (the “Revised COBR”) (published on the 20th of November 2025), which will:
- introduce changes to the COBR aimed at transposing the CCD II provisions relevant to the COBR. Such changes are briefly outlined by the MFSA in its Circular and essentially constitute the material changes brought about by the CCD II.
As the MFSA has clarified in its Circular, the relevant laws and rules listed above transposing the CCD II as well as the Revised COBR2 will become binding and applicable as of 20th November 2026, allowing for a one-year transitory period.
Key changes and MFSA approach to national options
The MFSA provides an overview of the main changes brought about by the CCD II in its Circular, including the extension of its scope to agreements with a total amount of credit up to €100,000 and the introduction of requirements on the knowledge and competence of creditors and credit intermediaries.
The MFSA’s Circular also sets out the details on the Member State options and discretions which have or have not been taken up by the MFSA.
One key Member State option available under Article 31(2) of the CCD II which is being adopted locally is that related to limitations on specific charges or fees applied by creditors within the relevant jurisdiction . This is being implemented by means of the introduction of a cap on the Annual Percentage Rate of Charge (the “APRC”). Any bank or financial institution licensed by the MFSA and offering consumer credit agreements within Malta shall not apply an APRC which exceeds 16%.
Other options taken up at national level include those related to thresholds for early repayment compensation (Article 29(4) of the CCD II) and the prohibition on the use of terms such as “advice” or “advisor” (Article 16(4) of the CCD II).
Implications of the changes
As at today, consumer credit offerings by both banks and financial institutions continue to be regulated by the Consumer Credit Regulations (Subsidiary Legislation 378.12).
In the meantime, although the revised rules will enter into force one year from the date of this article, credit providers are encouraged to take a proactive approach to ensure full compliance by the 20th November 2026.
Although the two sets of regulations for banks and financial institutions that will partially transpose the CCD II as mentioned by the MFSA have not yet been published, the substantive changes to the consumer credit regime which ultimately impact operations and products are already available in the Revised COBR. Thus, a reconsideration of internal policies and procedures together with upgrades to internal systems and product reviews can be immediately undertaken as may be necessary to ensure preparedness and to minimise compliance risk.
1 The COBR will enter into force in a staggered approach, as clarified by the MFSA in a Feedback Statement issued in February 2025, however, the majority of the provisions of the Rulebook will come into force as from 1st March 2026.
2 For the sake of good order, the current version of the COBR will enter into force on the 1st March 2026. This will be replaced by the Revised COBR on the 20th November 2026.