| Consumer Credit Directive: The Parliament publishes a report on the transposition of the CCD in 14 EU Member States. |
STUDY for IMCO (January 2012): Implementation of the Consumer Credit Directive
Abstract
The study examines the state and the main difficulties of the implementation of Directive 2008/48/EC on credit agreements for consumers using the examples of fourteen Member States of the European Union. The analysis focuses on fully harmonised aspects of the Directive as well as on the provisions for which the Member States were given a wide margin of appreciation in achieving the objective of the Directive and options provided by the Directive. Furthermore, new regulations and regulations requiring interpretation are dealt with.
Finally, the study analyses the regulation of credit agreements which fall outside the scope of the Directive.
Committees: Internal market and consumer protection; Date :16-01-2012; Authors : Margaretha Lawrynowicz (in cooperation with Elwira Macierzyńska-Franaszczyk), Marc Barmscheid and Shaun Charlton
The report for IMCO on the CCD transposition in 14 EU Member States (Austria, Bulgaria, Cyprus, the Czech Republic, France, Germany, Greece, Italy, Latvia, Poland, Portugal, Romania, Spain, the United Kingdom) has been published. It mentions some of the difficulties for the implementation procedure due to the short transposition period and although there are some deficiencies, it was generally concluded that most of the fully harmonised aspects of the Directive have been transposed correctly. However, particularly the implementation of the right of withdrawal appears to have caused more difficulties. The same also seems to apply to the implementation of provisions for which there is a margin of appreciation and the options which were taken by the Member States. It is, however, noteworthy that Bulgaria did not take any, Austria, France, Italy and Portugal took only one option. Cyprus, Germany and Romania were the Member States which took the most options. There seems, however, to be no connection between the short transposition time for implementation and the reluctance of other Member States to take the options provided by the Directive.
Furthermore, it stands out that the option provided in Article 2 (6) concerning credit agreements which provide for arrangements to be agreed by the creditor and the consumer in respect of deferred payment or repayment methods, where the consumer is already in default on the initial credit agreement in combination with a further specified circumstance, and the option provided in Article 16 (4) (a), concerning provisions on the early repayment limiting the claim for compensation, were most commonly taken. In contrast, the options provided in Article 14 (2) concerning the reduction of the withdrawal period under certain circumstances, Article 14 (6) concerning the application of certain provisions if the contract needed to be concluded through the service of a notary and Article 16 (4) (b) regulating the opportunity of the creditor to claim higher compensation for early repayment are only taken each by one country.
Moreover, newly introduced regulations compared to the previous Consumer Credit Directive were introduced into the national legislation without major difficulties. Within the Member States, it was, however, not clear what was meant by a “representative example” in the sense of Article 4 of the Directive. The need for clarification at certain points, hence, became apparent. However, it is also noteworthy that the scope of application of the Directive has been extended in many of the Member States covered. Irrespective of the fact that unified regulations applicable to related subject matters facilitate the handling of such regulations, this could be interpreted as a sign for the success of the fully harmonised Directive.
Implementation of fully harmonised aspects
The fully harmonised aspects of the Consumer Credit Directive taken into focus within the framework of this Research Study are:
• pre-contractual information duties – SECCI (Articles 5 and 6),
• information to be included in credit agreements (Article 10),
• the right of withdrawal (Article 14),
• the right of early repayment (Article 16) and
• the fixed calculation method of the annual percentage rate of charge (Article 19).
(1) In six of the 14 Member States (Austria, Bulgaria, Cyprus, Greece, Italy, Spain) the Standard European Consumer Credit Information (SECCI) were transposed exactly; in four of the 14 countries covered (The Czech Republic, Germany, Latvia, Poland), there were slight differences in the wording but no change in content. The other four Member States implemented the SECCI with some slight changes.( France, Portugal, Romania, the United Kingdom. However, the changes are marginal) The majority of these Member States did not have difficulties with the implementation. It was, however, mainly criticised that the SECCI was too comprehensive and thereby hard to understand and that provision of the SECCI would increase creditors’ costs.
(2) Twelve of 14 Member States transposed Article 10 (contractual information to be written into the credit agreement) without any substantive problems, nor modifications with respect to the content. Only for Latvia and Romania have slight changes been reported. Both countries also did not transpose the provision on the conditions for the exercise of the right to withdraw from an overdraft agreement (Article 10 (5) (h)).
(3) The right of withdrawal has been implemented by all of the Member States covered. The various national implementations mainly correspond with Article 14 of the Directive. In many of the Member States a comparable right of withdrawal was already pre-existent. (Cyprus, France, Germany, Poland, Portugal, the United Kingdom). Difficulties with implementation were reported for Austria, France, Germany and the United Kingdom. The main difficulties relate to the nature of the repayment of the amount due (whether repayment is a pre-condition for the right of withdrawal or a consequence resulting from exercise of the right?) and the period of withdrawal. The individual national rules on the period of withdrawal causing difficulties might not prove in conformity with the Directive.
(4) In twelve of 14 Member States, the provision on early repayment has been implemented either verbatim, or, if not verbatim, then using very similar wording and in any case in compliance with the Article. Only for Portugal was it reported that the implementing Article, which provides that the consumer must give notice to the creditor of at least 30 days before the early repayment, might be not in conformity with the Directive. Half of the Member States covered took one or two of the options in Article 16 (4) modifying the regulation of compensation under Article 16 (2) (2). The provision containing rules on compensation for the creditor in the case of early repayment led to some criticism in the Member States, particularly in France, where it was pointed out that the level of consumer protection would be lowered.
(5) No specific difficulties were reported with respect to the implementation of the provision on the APR.
Implementation of provisions containing a wide margin of appreciation
The Directive, on the other hand, regulates certain aspects which need to be transposed into the national legislation. However, some freedom is left to the Member States as regards the modalities of implementation.
The study particularly concerns the margin of appreciation provided in:
• Article 5 (6) (2) regarding the adequate explanations as to specific details of the credit agreement,
• Article 15 (2) (2) regarding the remedies against the supplier and
• Article 23 regarding the penalties for infringements of the Consumer Credit regulation.
(1) The general duty to give explanation on the credit offer under Article 5 (6) (1) was implemented by all of the Member States except of Italy (The Italian legislation did not transpose a separate duty to provide the consumer with additional assistance.Assistance under Italian legislation means “assistance” in the sense of article 5 (6) (1) and (2)). Nine of the Member States covered did not provide for clarification of this duty which constituted a margin of appreciation contained in Article 5 (6) (2) (Bulgaria, Cyprus, the Czech Republic, Germany, Greece, Italy, Latvia, Poland and Spain). Germany listed some non-binding parameters for the interpretation of the national legislation in the preamble. Only Austria, France, Portugal and the United Kingdom gave greater precision as regards what it included in the duty to explain.
(2) Three of the Member States (Czech Republic, Greece and Romania) did not adapt specific remedies for consumer credit and linked credit agreements. Eight of the Member States covered expressly adapted remedies available against the creditor when withdrawing from a linked credit agreement (Austria, Cyprus, Germany, Latvia, Poland, Portugal, Spain and the United Kingdom). In all of these Member States, except for Germany, the subsidiary character of the remedies against the creditor was maintained.
(3) The majority of the Member States established national penalties for infringements of national legislation implementing the Directive. Some of the Member States, however, did not adapt new national penalties assuming that the existing national rules would provide satisfactory sanctions in case of infringements.
Implementation of options
The Directive furthermore provides options for the Member States. In case of options, Member States were free to take the fully harmonised option or not at all. The options analysed in the study are provided in:
• Article 2 (5) and (6) (option concerning credit agreements concluded by a specified organisation and option concerning credit agreements which provide for arrangements to be agreed by the creditor and the consumer in respect of deferred payment or repayment methods, where the consumer is already in default on the initial credit agreement in combination with a further specified circumstance) - Article 2 (5) Options taken by Cyprus, Latvia, Romania; Article 2 (6)22 by Cyprus, Czech Republic, Greece, Germany,
Latvia, Poland, Portugal, Romania, Spain
• Article 4 (2) (c) (option concerning the application of the standard information to be included in advertising, particularly the APR in case of credit agreements in form of an overdraft facility), Options taken by Cyprus, the Czech Republic, France, Germany, Spain
• Article 6 (2)(option concerning the application of the pre-contractual information duties, particularly as regards the APR in case of credit agreements in form of an overdraft facility), Options taken by Czech Republic, Germany, Romania
• Article 10 (5) (f)(option concerning the application of the information to be included in the credit agreement, particularly the APR in case of credit agreements in form of an overdraft facility), Options taken by Czech Republic, Germany, UK
• Article 14 (2) and (6) (option concerning the reduction of period of withdrawal in case of linked credit agreements and the option referring to the application of certain provisions if the contract by law had to be concluded through the service of a notary and other specified circumstances are fulfilled) Options taken by Article 14 (2) France; Article 14 (6) Germany; and
• Article 16 (4) (options concerning specific provisions on the early repayment). Options taken by Cyprus
Implementation of certain new regulations
Many of the newly introduced regulations compared to the previous Directive (such as the SECCI, the duty to provide the consumer with explanations on the credit offer and the APR) are analysed in more specific parts of the study. However, remaining newly introduced regulations are dealt with in this chapter. In this chapter, the study particularly focuses on:
• the regulation on advertising requirements in Article 4 and
• the “sufficient assessment” of a consumer’s creditworthiness according to Article 8.
(1) In all of the Member States Article 4 (1), which states that “any advertising concerning credit agreements which indicates an interest rate or any figures relating to the cost of the credit to the consumer shall include standard information...[in the form of a representative example]”, has been transposed. Difficulties within the Member States, however, arose in understanding what was meant by a “representative example”. According to Article 4 (1) (2) the obligation as stated in Article 4 (1) (1) does not apply “where national legislation requires the indication of the annual percentage rate of charge in advertising concerning credit agreements which does not indicate an interest rate or any figures relating to any cost of credit to the consumer”. In some of the Member States, however, the regulation as provided in Article 4 (1) (1) is also applied to credit agreements as defined in Article 4 (1) (2).(Austria, Italy, Latvia, Portugal and Romania). In France, the standard information is not mandatory and the previous regime for advertising applies. Bulgaria and Cyprus did not apply any standard for consumer credit advertising which does not include figures relating to the cost of credit. The option provided in Article 4 (2) (c), as already indicated above, was solely taken by the Czech Republic, Germany, Poland, Spain and the United Kingdom. According to this Article, the representative example in case of overdraft facilities does not need to indicate the APR.
(2) All of the Member States transposed the duty to assess creditworthiness of the consumer. Some of the Member States remained faithful to the formulation of the Directive which provides that relevant databases should be consulted “where necessary” (Cyprus, the Czech Republic, France, Italy, Latvia, Romania and the United Kingdom). In Portugal and France, the consultation of relevant databases was made mandatory. In Poland, the Banking Act already included a legal definition of an assessment of creditworthiness. The creditworthiness check is reserved solely for banks and credit institutions. Consumer credit providers subject to the Polish Banking Act are held to the standards of verifying creditworthiness’.30 Consumer credit providers which are not banks or credit institutions need only check the ‘credit risk’ of consumers. Member States such as Cyprus and Latvia, to name but two, have made direct reference to their respective laws on data protection in establishing the limits of creditworthiness checks.
Extension of the scope of application of the Directive
Finally, the study deals with the extension of the scope of application of the study to other credit agreements not covered by the Directive. In many Member States covered it may be observed that the scope of application is extended as well as regards the personal scope of application as the subject matter of the scope of application. The following table illustrates the extension of the scope of application in the Member States as to its subject matter.
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| ID: |
47898 |
| Publication date: |
08/02/12 |
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Created: 08/02/12. Last changed: 08/02/12.
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