Brussels, 10/10/2005 (Agence Europe) - On Monday, the European Commission adopted a revised draft directive on consumer credit which aims to level up the rights enjoyed by consumers across the EU, within a genuine single market for such services. The modified proposal is intended to take into account the European Parliament's positions as expressed in its first reading and to facilitate agreement between Parliament and Council. The legislation is highly controversial and its progress through the decision-making procedures is turning into a real saga.
The first version was unveiled by the Prodi Commission in September 2002, aiming to provide new common consumer credit rules to protect consumers from over-extending themselves, making lenders more responsible for assessing ability to pay and giving consumers greater confidence. The full harmonisation of national legislation recommended by the Commission in this framework directive (to replace the wholly out-of-date 1987 directive, 87/102/EEC) did not win support at the European Parliament and the Commission was forced to come up with an amended proposal in October 2004 (see EUROPE 8821). The Commission has now published key changes to the Commission's first amended proposal of October 2004.
The changes include restricting the scope to consumer credit of up to €50,000 to cover the most common consumer credit contracts; Mortgage credit will be addressed separately following the consultations triggered by the Green Paper on Mortgage Credit launched in July; Applying a specific regime based on pre-contractual and contractual information to credit contracts of up to €300; Giving Member States more flexibility to adapt the rules to their national situation in certain clearly specified areas, while insisting on a mutual recognition clause in a limited number of cases to protect the single market; Making it easier to compare consumer credit contracts through a harmonised method of calculating the cost of credit; A list of information that consumers must be given; A right of withdrawal of up to 14 days; The right to repay a loan early; and the right to break a credit contract if the related purchase is cancelled.
In a press release, Markos Kyprianou, Commissioner for Health and Consumer Protection, said: “This new draft maximises the benefits to consumers while keeping 'red tape' to a minimum. This Directive makes it simpler for consumers to compare the cost of credit and easier for industry to offer credit across borders. The changes we have made, which reflect many of the concerns expressed by MEPs, Council and our consultations with stakeholders, should also facilitate the adoption of the proposal next year.”