The Commission adopted a proposal for a new directive on consumer credit. The main elements of the proposal for a new consumer credit directive are as follows:
Enlargement of the scope - the new directive covers all consumer credit no matter the form, amount and any surety or insurance. Regarding mortgage credit: The directive will cover mortgage-backed consumer credit ('equity release') but classical home loans remain outside the scope;
Improved transparency and comparability - the classical concept 'total cost of credit to the consumer', which is expressed in the 'Annual Percentage Rate' (APR), is harmonised to improve comparability;
Consumer disclosure and lender respect - the borrower is obliged to disclose all relevant information when asked by the lender. In return, the lender must 'know thy client' by advising on the most appropriate product in his product range and by conscientiously assessing the borrower's ability to repay before granting new credit ('responsible lending');
Improved freedom of circulation of quality solvency data - the lender's right of access to solvency data is strengthened. The quality of this data is strengthened by groundrules on the operation of existing databases on 'payment incidents' (failure of consumers to reimburse);
Rights of withdrawal - within 14 days and free of charge and without justification and early repayment against, in most cases, payment of an indemnity;
Registration of lenders and credit intermediaries and ground rules for the operation of intermediaries;
Liability of lenders if suppliers of goods and services act as their credit intermediaries, e.g. in case of loans linked to a purchase or of cards issued by retailers. Credit disconnected from sales such as credit by cards remain outside the scope;
Protection of personal guarantors and of consumers not fulfilling their contractual obligations. The latter rules not only protect consumers against abuse, they also improve lenders' scope for calculating the risk/cost of non-performance.
Commission proposal
Commission press release
© European Commission
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