05 November 2007

IMCO meeting 5 November

Consumer Credit

Rapporteur Kurt Lechner (EPP,D)

Consideration of Draft Recommendation

IMCO Committee discussed the draft recommendation for the second reading on the Consumer Credit Directive. Introducing his report, rapporteur Kurt Lechner called for a far reaching simplification of the language regime to make the text more understandable for the consumer. He also called the pre-contractual and contractual information requirements as excessive (in particular Art. 4, 5, and 10).

Mr Lechner also intends to introduce major changes to the right of withdrawal (Art 14). The right of withdrawal should be subject to a lapse date. In view of the numerous rules with which businesses will be required to comply, errors may occur when concluding a contract and providing information about the right of withdrawal, he explained. 6 months after the conclusion of the contract, the legal position should therefore become incontestable.

With regard to early repayment and compensation Mr Lechner intends to completely delete the provisions on compensation, thus leaving the matter to the discretion of the Member States (Art 16).

Mr Lechner finally intends to adjust the scope of the directive from €500 to €50.000.

Responding to the rapporteur, Mr Dunn (ALDE,UK) questions Mr Lechners intention to remove notarial arrangements (Art 14,5). Mr Lechner calls that Member States should be able to decide for themselves whether and to what extent they wish to apply the provisions of this directive.

All respondents, Arlene McCarthy (PES,UK), Evelyne Gehard (PES,D), Bill Dunn (ALDE,UK) criticized Mr Lechners intention to delete large parts on the obligation of information requirements. Heide Rühle (GREEN,D) particularly criticized the deletion of a databank for information (Amn 40).

Another major point of disagreement was the introduction of the “6 months” proposal concerning the right of withdrawal. All speakers requested further clarification on that point.

Finally, Mrs Gebhard criticised the adjustment of the scope of the directive as many consumer credit arrangement, particularly in the new member states, will then fall out of the scope.

Speaking for the Commission, Dirk Staudenmayer (DG SANCO) made clear that the deletion of Art 16 (early repayment and compensation) as by the rapporteur would leave the market to the rules of 1987, and it would curtail cross-border competition in Europe.

Also with regard to advertising concerning credit agreements and the information requirements Mr Staudenmayer underlined that this information should increase the comparability between different offers, and represents therefore a central part of the arrangement.

Timetable:

12 November – extraordinary meeting in Strasbourg

13 November – deadline for amendments

Draft recommendation for second reading

© Graham Bishop