The Directive has been the subject of fierce debate since 2002
but a last-minute political agreement was reached between parties
in the centre-right EPP-ED group, the leftwing GUE/NGL and the
Liberals and Socialists.
The Commission has long wanted to harmonise the market for
consumer credit in order to make it easier for consumers to choose
credit from any EU country. Interest rates on consumer credit range
from 6% in Finland to 12% in Portugal, according to the European
Central Bank (ECB).
"[The Directive] will directly affect many people's lives," said
Meglena Kuneva, EU Commissioner for Consumer Protection. "It is
about two critically important issues. It is about consumers being
able to make better informed choices when they take out credit
loans – to pay for a family wedding, a washing machine or a new
car. And it is about consumers getting more choice and more
competitive market."
"It is also a very important vote for business - creating a
single, simple framework of rules so banks and other creditors can
do business more easily cross border," said Kuneva.
Before it becomes a full Directive, the proposal must be agreed
by the Council of the EU. After that, countries will have two years
in which to make the Directive law.
The Directive will make it easier for companies offering credit
to operate in any EU country. The European consumer credit industry
is worth an estimated €800 billion a year.
Rules about advertising, pre-contract information, contracts and
definitions will be harmonised, as will processes for calculating
the full cost of a loan. The Directive will also put a cap on the
cost to consumers of paying back loans early.
"We need to stimulate the EU’s market in financial services, but
of course, on the other hand, we also need to ensure that our
consumers make sensible and informed choices and that they have all
the information and the comparators available to them to do that,"
said Diana Wallis, a UK Liberal Democrat MEP.
The new rules will only apply to loans of between €200 and
€75,000 and will not apply to mortgages.
Though consumer debt is increasingly being identified as a
problem, the aim of the proposal is not to curb or control consumer
debt levels.
"On the one hand, easier credit must not lead to a debt burden
on households," said a Parliament statement. "On the other,
consumer protection must not generate costs that could be
intolerable to the financial health of banking institutions."
