The ministers of the EU Member States reached, on Thursday 9 June in Luxembourg, a ‘general approach’ formalising the position of the EU Council on the proposed directive on consumer credit agreements, which modernises Directive 2008/48/EC, which it will repeal.
This June 2021 proposal aims to take account of the increasing digitalisation of a market where new operators and risky credits have appeared, to prevent over-indebtedness of consumers in this period of crisis and to create an internal market for credit through harmonised conditions for credit companies.
The agreed text was the result of intense compromise work and had already been approved by the Member States’ ambassadors to the EU (see EUROPE 12967/20, 12961/7).
All delegations supported the text. Estonia and Lithuania submitted a joint statement to the minutes of the session to underline that the assessment of solvency (Article 18) is one of the most important issues.
The adoption of the EU Council’s position paves the way for negotiations with the European Parliament, when it is ready.
Agnès Pannier-Runacher, the French Minister for Energy Transition, who chaired the EU Competitiveness Council session, welcomed this progress on “a priority of the French Presidency in the field of financial services”.
“This proposal for a directive should help protect consumers from practices that are contrary to their interests. It is Europe that protects, in a framework that takes into account the evolution of consumer credit, new digital practices, free credit”, she said.
She also welcomed a level playing field for operators “which will ultimately benefit the internal market”.
According to the Czech Deputy Prime Minister, Josef Sikela, whose country will take over the EU Council Presidency in July, the EU Council was concerned “with strengthening consumer protection, but not to limit the supply of financial products on the market”. He said he was determined to defend the EU Council’s approach in negotiations with the Parliament “to ensure good rules for consumers and lenders”.
Partial exclusions and derogations. The EU Council mandate simplifies the rules on pre-contractual information to be provided to the consumer.
It excludes from the very broad scope of application direct crowdfunding, deferred debit cards, rental or leasing contracts with no obligation or option to purchase.
The EU Council also provides for an optional partial derogation from certain provisions for certain credit products considered less risky, namely: - credit loans of less than €200, credit granted in the form of an overdraft facility to be repaid within three months;- credit agreements free of interest and any other charges; - contracts with a maximum period of three months and negligible costs.
This will allow the adaptation of pre-contractual information, advertising requirements and early repayment provisions.
During the public deliberations, all delegations thanked the French Presidency and the previous Slovenian Presidency for the work done.
The Commission has reservations. While he welcomed the fact that the EU Council now has a negotiating mandate, the Commissioner for Justice, Didier Reynders, indicated that the Commission was reserving its position at this stage, deploring in particular an insufficient level of harmonisation, which is deemed to be contrary to the objective of the legal basis of the text (Article 114 ‘Internal Market’).
Several delegations, such as Luxembourg and Latvia, share this view.
The Commission also stated that it regretted the exclusion of deferred debit cards and crowdfunding services from the scope of application, “as these products also present risks”. Nor can it be satisfied with the provision of pre-contractual information to the consumer ‘in good time’, when “40% of consumers receive this information on the same day they sign the credit agreement”, Mr Reynders stressed.
The latter also considered that the assessment of the consumer’s creditworthiness “must be as clear and legally sound as possible”.
The European Parliament has not yet taken a position. The vote on the report by Kateřina Konečná (GUE/NGL, Czech Republic) in the Committee on the Internal Market and Consumer Protection (IMCO) (see EUROPE 12957/15) is scheduled for 15-16 June.
See the EU Council’s general approach (in French): https://aeur.eu/f/20k (Original version in French by Aminata Niang)