| CONSUMER CREDIT DIRECTIVE FINALLY PASSED - The European Council adopted the Consumer Credit Directive 2008 on April 7. The big three pitfalls of the credit system causing the present credit crisis: Usury; Refinancing; Variable rates have received no answer. The law on the disclosure of the Annual Percentage Rate of Charge remains unchanged despite its practical abolition through new forms of credit. BEUC sceptical. Industry complains about unnecessary information duties, a correct view because it is not the necessary information which are made obligatory but many confusing details. |
Usurious fees can still be hidden in insurance products without disclosure in the Interest Rate of the Credit. As the request for such usurious insurance contracts has to be made before the acceptance of the credit by the bank it is rather ridiculous that the Directive call such contracts an expression of the free will of the consumer.
Variable rate credit which helped cause the subprime mortgage crisis in the US gets no limitations.
Refinancing in a difficult situation, where banks use their power either to cancel or to adapt the credit for imposing very disadvantageous conditions, has been taken out from the first Draft.
Paying off one's debt before the end of the contract will be more costly in the future in many Member States.
No limitations have been regulated for such high interest rates which at first “tease” or lure customers into the credit with a rate of 3.0% but which later come out as an individual price close to 16% when the credit is granted.
With its upcoming conferences in Hamburg and the new soon to be announced international ECRC European Conference in London in November, ECRC and participating stakeholders will discuss how these necessary answers to the instability of the credit system can be given on a national level.
BEUC STATEMENT
"Today the European Parliament has decided to put an end to the five years of discussions on
consumer credit which have created intense debate in the Institutions. Although we are pleased that consumers in some Member States will be better informed about the real cost of taking out a loan, we regret that opportunity has not been seized to start to tackle the problem of over-indebtedness by strengthening the concept of responsible lending.
From now on, early repayment charges for consumers will be subject to controls, and we are pleased that Member States will be able to prohibit lenders from imposing such charges. We are convinced that France, Belgium, Finland, Slovenia and Poland will maintain their consumer protection standards
which are higher than in the rest of Europe.
According to Monique Goyens, BEUC Director General “Even though the result is a long way from our initial demands, there have been some improvements, particularly in terms of the information which should be provided to consumers. However we regret that all the efforts of the last five years have not
led to a more ambitious solution to an issue which affects almost every household in Europe.”
STATEMENT BY ULC LUXEMBOURG
See the link to comments in French made by ECRC’s partner from Luxemburg ULC – they talk of disappointment. |
| ID: |
41182 |
| Author(s): |
UR |
| Publication date: |
09/04/08 |
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Created: 18/04/08. Last changed: 18/04/08.
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