Brussels, 21/05/2007 (Agence Europe) - Monday evening's Competitiveness Council managed to scrape a political agreement by qualified majority on the proposed directive to harmonise rules within the EU on consumer credit (with the exception of mortgage loans), covering pre-contractual or contractual information to be provided to the consumer, the cooling-off period, which has been set at 14 days, and the harmonised method to calculate the effective annual credit rate.
The persistence of the German Presidency, which was acknowledged by all, and the goodwill shown by many delegations in favour of a compromise, account for this positive outcome on a text which has been on the discussion table for five years. Public deliberations focused exclusively on the only point which remains controversial, which is the threshold above which a penalty will be paid by consumers to banks or other lending organisations in case of the early repayment of their credit at a set rate, due to the reduction in interest rates (an operation which is most lucrative for the consumer, but which penalises the bank). Two table rounds and a great many concessions were needed in order to reach a compromise.
The text which was approved set at 10,000 EUR the sum for early annual repayment, above which consumers will have a penalty to pay to the lender, but the Member States will be free to set this threshold at a lower level. The total of the penalty will be limited to 1% of the sum paid back.
Initially, the Commission had proposed to set the penalty threshold at 2000 EUR a year, the German Presidency proposed 5000, but Luxembourg, Cyprus, Poland, France, Greece and Estonia opposed this figure. France, Finland, Poland and Estonia, who do not practise this type of penalty, pleaded forcefully for the threshold to be raised to 10,000 EUR, or even to 17,000).
The Netherlands (which were opposed to any threshold at all) and Greece (which sees the threshold as a reduction in levels of consumer protection) voted against the text. Belgium (which felt that the text was very far removed from the initial objective of maximum harmonisation of national legislations) and Luxembourg (which takes the view that the text represents more a closing-off of the market than an opening-up) abstained.
Nonetheless, the President of the Council, Brigitte Zypries, welcomed the agreement reached as a real success. “This directive will allow all countries generalised cooling-off rights for all consumer loans. It will allow the consumers to compare, on a column-by-column basis, harmonised contractual information in a form, irrespective of the country which made the loan offer, and to analyse the offers, because the calculation of the interest rate will be the same in all the countries of the EU”. According to the German Minister, these aspects constitute “a real improvement for consumers, who will be able to compare and fully benefit from a proper single market for consumer credit”. Meglena Kuneva, Commissioner for Consumer Policy, welcomed the progress made on a directive which, in her view, constitutes “an example of what must be done in financial services to improve conditions offered to consumers”. (an)