20 April 2004

Parliament adopted Directive on Consumer Credit in first reading

Parliament adopted the directive on consumer credit amending it in a number of key areas. Parliamentarians acknowledge that in some areas full harmonisation may be needed. An example would be the rules on the annual percentage rate of charge laid down in the directive.

The amendments also foresee to exclude various types of loans from the directive. These include credit agreements of less than �� or more than ��,000 in net loan, further credit agreements secured either by a mortgage on immovable property, hiring and leasing agreements, private credit agreements, credit which an employer gives his employees as a subsidiary service and credit in the form of an advance on a current account or a debit account if the total amount must be paid back within three months or on demand.

Another key point is the need for standardised information about credit offers and credit agreements. Parliament says this information should always include the annual percentage rate of charge, the agreed duration of the credit, the number and amount of monthly payments and the total cost of the credit. Additional information, in particular with relation to costs, the modalities for repayment, any deposit required or the amount of the rates may be provided separately.

Regarding cross-border credit, the Parliament says each Member State must grant access to databases to creditors from other Member States under the same conditions as for firms and individuals in its own country. Parliamentarians add that the consumer and the guarantor have to be informed of the results of any such consultation immediately and without charge. The consumer should be allowed to pay back loans at any time before the period fixed in the agreement.

The final report will be available soon

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