The European Commission on Monday launched its third attempt to harmonise rules for consumer credit across the EU, arguing that thelatest changes to the plan would reconcile the need to provide consumers withsufficiently transparent information and concerns that the rules will create more red tape.
The decision to revive controversial consumer credit legislation, first tabled in 1987, also coincides with a deregulation drive by the Commission, which is aiming to withdraw 70 proposed laws. But Markos Kyprianou, EU commissioner for consumer protection, defended such legislation as it maximised “the benefits to consumers while keeping red tape to a minimum”.
An important change is that the proposal excludes mortgages, which the Commission started to review separately in July. The text also gives more leeway for governments to adapt certain rules and gives consumers 14 days to withdraw from a loan contract. They will also have an explicit right to pay off a loan early in return for “fair and objective compensation”.
Mr Kyprianou said he hoped the “greater flexibility” in the latest plan would ensure the legislation could be approved by governments and the European parliament next year.
The Commission was forced to go back to the drawing board last October after European parliamentarians rejected several aspects of its proposal.
The plan also restricts the scope of the legislation to consumer credit of up to €50,000 ($60,000, £35,000), to cover the most common loan contracts and target consumers Brussels considers to be vulnerable to misinformation and loan sharks.
The rules will, for example, stipulate what kind of information must be provided in loan advertisements, such as the size of the monthly repayment and any additional fees. The requirements will be lighter for loans of up to €300.
Jim Murray, director of Beuc, which represents European consumers,said: “The new proposal …should improve the situation for many consumers but, with so much left to member states to regulate, it may not have a very large impact on building a single market in consumer credit.”