A directive proposal to harmonise the €800 billion consumer credit market is coming up for a vote in the European Parliament. The goal is to allow consumers to enjoy the same rights and information standards across the EU.
Part of this looks at prying credit out of the local business domain to make it more cross-border, as the rates charged are so variable.
A consumer affairs spokeswoman in Brussels touches on some of the main aims: “The new directive puts in place five or six key elements which will make it easier for consumers to compare loans in a more transparent and competitive way, in particular in relation to advertisments, where the figures given in advertisments will have to be standard and comparable.”
One of the main objectives of the directive is to protect consumers against taking on too much debt. To prevent this, the information given by the lender must allow the borrower to make a responsible decision and the lender must also assess the solvency of the borrower.
The issue of early repayment remains one of the largest stumbling blocks. Monique Goyens, head of the European consumer defense bureau BEUC says: “The texts now are much too vague. There’s no transparent plan. There’s even a risk in some member states that a creditor asks for the full term of interest to be paid even if the consumer pays the money back ahead of deadline. That is unacceptable. The current version of the proposal as it was presented by the parliament is one of maximal harmonisation. That means that in the countries where a penalty payment for a sooner- than-contracted reimbursement is required, such as France, that has to go. It puts the consumer entirely at a disadvantage.”
MEPs are scheduled to vote on the text with hundreds of amendments on Wednesday. Some are worried that an overload of information and bureaucracy could result in higher prices for consumers.