Banking regulatory law – lawyer in Frankfurt am Main

German banking regulatory law does not only concern banks. Fintechs, lending platforms, funds, family offices and companies that grant loans or purchase receivables also need to check whether their business requires a licence. Acquiring a stake in a regulated institution triggers additional notification and assessment procedures.

Financings have been part of my work from the start of my career: from 2016 to 2021 I worked in banking & finance at Taylor Wessing in Frankfurt, where my work included loan and security agreements, legal opinions, conditions precedent and legal due diligence reports. I am currently advising an internationally active direct selling company on implementing the new consumer credit rules – from assessing which payment and financing models it offers are covered, through adapting its terms and conditions, order forms, contract documents and withdrawal information, to the regulatory obligations under the new Sales Financing Supervision Act (AbsFinAG). I see banking regulatory law as an interface with my core areas of M&A and venture capital and venture debt.

New consumer credit rules from 20 November 2026 (CCD2)

Germany has transposed the second Consumer Credit Directive (Directive (EU) 2023/2225, “CCD2”) by the Act of 12 May 2026 (Federal Law Gazette BGBl. 2026 I No. 139). The new rules apply from 20 November 2026; there is no transitional period for the civil-law obligations. They do not only concern banks: the scope of consumer credit law is extended, among other things, to small loans below EUR 200, certain interest-free and fee-free credit and instalment models (“buy now, pay later”). Retailers and direct selling companies offering their customers instalment payments or subscriptions with staggered payments may therefore also be covered.

At the same time, the Sales Financing Supervision Act (Absatzfinanzierungsaufsichtsgesetz, AbsFinAG) introduces BaFin supervision for the first time of companies outside the banking sector that grant consumer credit. From 20 November 2026 they are subject to BaFin's supervision of irregularities and must register with BaFin under section 4 AbsFinAG; registration must be completed by 20 November 2027. This is a registration procedure, not a licensing procedure.

For companies concerned, the need for adjustment includes in particular:

• Scope: which payment and financing models will qualify as consumer credit or financial accommodation?
• Information and contract: European standard information before conclusion of the contract and mandatory information under Article 247 EGBGB; text form will be sufficient for the contract.
• Withdrawal information: the previous statutory model form is abolished. If the withdrawal information is missing or incorrect, the withdrawal period does not begin.
• Creditworthiness assessment: stricter requirements for the assessment and its documentation, and information obligations if credit is refused.
• Terms, order documents and dunning: adapting terms and conditions, order forms, payment reminders and dunning letters.
• Advertising: disclosures under the Price Indication Ordinance (PAngV) and the warning “Achtung! Kreditaufnahme kostet Geld” (“Attention! Borrowing money costs money”) when advertising financial accommodation (UWG Annex No. 23e).
• Service providers: adapting contracts with payment, debt collection and credit reference service providers.
• Supervision: registration with BaFin and organisational requirements under section 5 AbsFinAG.

I help companies classify their payment and financing models, prioritise the need for adjustment and adapt contract documents, processes and advertising to the new rules.

Licensing requirements under the KWG and ZAG

Anyone wishing to conduct banking business or provide financial services in Germany commercially, or on a scale requiring a commercially organised business operation, needs written authorisation from BaFin under section 32(1) of the German Banking Act (Kreditwesengesetz, KWG). The activities covered are listed in section 1(1) and (1a) KWG. Payment services and e-money business are governed by the licensing provisions of the Payment Services Supervision Act (sections 10 and 11 ZAG).

In practice, the key question is often where the line is drawn. Typical questions include:

• Lending: When does granting cash loans constitute licensable lending business within the meaning of section 1(1) sentence 2 no. 2 KWG – for example with shareholder loans, intra-group financing or repeated lending by investors?
• Venture debt: How can a venture debt financing be structured so that lenders and borrowers comply with regulatory requirements?
• Factoring and purchase of receivables: When does a licensable financial service under section 1(1a) sentence 2 no. 9 KWG exist?
• Lending platforms: What role does the platform play, who is the lender, and which rules apply to brokerage and payment flows?

Conducting licensable business without authorisation may lead to regulatory measures under section 37 KWG and is a criminal offence under section 54 KWG. It is therefore sensible to review the business model before launch.

Change-of-control procedures (section 2c KWG)

Anyone intending to acquire a qualifying holding in an institution, or to increase an existing holding beyond certain thresholds, must notify BaFin and the Deutsche Bundesbank in advance under section 2c KWG. The supervisory authorities assess, among other things, the reliability of the acquirer and the source of funds; the details are set out in the Owner Control Regulation (Inhaberkontrollverordnung). Section 14 ZAG provides for a corresponding procedure for payment and e-money institutions.

For acquisitions, this means that the change-of-control procedure must be part of transaction planning. The timetable, closing conditions in the purchase agreement and the documents to be submitted should be coordinated early. Here, regulatory law meets my advice on M&A and company acquisitions.

Dealing with BaFin and the Bundesbank

Whether an enquiry on licensing requirements, a licence application, a change-of-control notification or ongoing reporting obligations under section 24 KWG: I assist in preparing documents and in communicating with BaFin and the Deutsche Bundesbank, which participates in ongoing supervision under section 7 KWG.

Interface with anti-money laundering law

Credit, financial services and payment institutions are obliged entities under section 2(1) of the German Money Laundering Act (GwG). Among other things, they must maintain risk management, perform customer due diligence and report suspicious transactions. Outside the financial sector, the GwG is also relevant, for example regarding notifications to the transparency register, which regularly need to be checked in transactions and restructurings.

Distinction from MiCAR and the KAGB

Not every financing or investment model falls under the KWG. Crypto-asset services are subject to the EU Markets in Crypto-Assets Regulation (MiCAR, Regulation (EU) 2023/1114); collective investment schemes may fall under the German Capital Investment Code (KAGB). Correct classification is the first step before reviewing specific obligations.

Frequently asked questions

Do I need a licence to grant a loan to a start-up?

That depends on the individual case. A single loan is often not commercial in nature. However, anyone who grants loans repeatedly and with a view to profit may fall within the scope of section 32 KWG. The structure should therefore be reviewed before disbursement.

When does a change-of-control procedure have to be initiated?

The notification must be filed before the acquisition, as soon as there is an intention to acquire a qualifying holding in an institution. In practice, closing of the purchase agreement is therefore usually made conditional on completion of the procedure.