Brussels, 10/09/2002 (Agence Europe) - On Wednesday, the Commission will be adopting, without debate, its proposal to serve as a framework for consumer credit in the Union with new common rules to guarantee better consumer protection against over-indebtedness and increased liability of the lender. This proposal of directive, which is to replace a 1987 directive on consumer credit (Directive 87/102/EEC) could have been adopted by written procedure from August if there had not been translation problems (see details in EUROPE of 31 July, p.6).
During a technical briefing organised on Tuesday, Jens Ring, from the Directorate General for Consumer Health at the Commission, explained to the press the reasons for and the content of the new proposal. He said the 1987 directive is out of date. When it was adopted, consumer credit was still rare. It has considerably developed since then to become a daily consumer phenomenon. The aim of the new directive is to adjust to present and future market reality, and to create a single legal framework while leaving most of the regulation to Member States, he said. Among the main innovations proposed by the Commission, he cited: - a range of common rules for broader harmonisation of national legislation, integrating many provisions already foreseen in the current legislation or being developed by certain Member States; - extension of the scope of the current directive to all types and forms of credit to individuals, except for mortgage loans (for housing), for which exclusion is maintained (for this kind of credit there is already a Commission recommendation concerning conduct codes); - increased transparency concerning credit offers, which will make comparison easier; - a longer list of compulsory information to be mentioned in credit contracts, mainly the total amount of the credit, so that the consumer knows when the contract is signed what the effective cost of the loan will be including interest rate variations; - the obligation on the part of the consumer to divulge all information the lender requests; - the right for the consumer to withdraw 14 days after concluding the contract; - the notion of "responsible" loan, i.e. the obligation for the lender to constantly evaluate the possibilities of reimbursement so that the borrower's situation is not placed in danger (it is up to the lender to evaluate the commercial risks of the credits that are agreed); - registration of the intermediaries and lenders; - and improved circulation of information with a system for access to the existing databases in Member States concerning credit quality.