Brussels, 18/03/2004 (Agence Europe) - In Tuesday's decision on the draft directive on consumer credit, the legal and internal market committees at Parliament opted for minimum harmonised rules applicable to credit contracts in the European Union. Rapporteur, Joachim Wuermeling (CSU MEP) was pleased to obtain a comfortable majority (24 votes for, 4 against) and the parliamentary committee has therefore turned its back on the principle of total harmonisation proposed by the European Commission as the best way to strengthen consumer confidence in credit via suitable information, for protecting them against the danger of debt and increasing the liability of lenders which would therefore enable the single market to function freely within a common framework.
To justify their choice, MEPs said that total harmonisation would bring down consumer protection rules in force in a number of Member States. They consider that minimum harmonisation would allow higher level of national standards to be preserved for protecting consumers, which was not included in the directive. they admit, however, that total harmonisation could turn out necessary to allow consumers compare proposed products and select optimum products for themselves. MEPs believe that this would also apply to loans and credit contracts which have to provide the borrower with standardised information on the annual rate of paid for the credit, the length of time the credit is covered, the number and amount of monthly payments, as well as the total cost for the loan or credit.
The Parliamentary committee also limited the remit of the directive by excluding the application of credit contracts from its field of application that are less than EUR 1,000 or more than EUR 50,000, loans guaranteed by mortgages on homes, rental and lease agreement contracts, private loans, credit granted by employers to their employees as additional payments and loans by banks in the form of overdrafts or advances into current bank accounts if the total amount of the credit has to be repaid in a three month period on demand. MEPs chose not to ban home loans.
As opposed to the European Commission which wanted to include compulsory information on credit agencies in order to promote the principle of responsible lenders, MEPs were keen to promote the principle of adult consumers. They therefore judge it timely for consumers themselves to be obliged to communicate certain information before signing a contract, so that the lender is sure of their solvency.
MEPs also cut the deadline down from a fortnight to a week for consumers, after agreeing to a contract for loans or credit to withdraw from a contract without indicating a reason. In the event of suspension of a contract involving the provision of goods or services, consumers are no longer compelled by their agreement to a private credit contract to consume the given product if they have cancelled it. According to MEPs, consumers also have to be able to refuse repayment of the credit if the goods or services have not been delivered or provided.
Pleased with the vote, Joachim Wuermeling, interprets the development as a bulwark against "excessive restrictions on offers of credit". He always thought that they were exercised to the detriment of the most socially deprived consumers, which were barred access to credit when they needed it most.
It is now up to the plenary Parliamentary session got given its word on the case in April.