The Council adopted a consolidated modified proposal on the Consumer Credit Directive taking due account of the position expressed in the European Parliament’s first-reading opinion and incorporating 110 of the 152 amendments proposed therein.
The Council shared the view that the directive should ensure a high level of harmonisation in substantial areas covered by its scope and should represent a "European added value" for the internal market, consumer choice and consumer protection. The Council identified five main areas in which such a "European added value" should be achieved:
• pre-contractual information (Articles 5 and 6);
• contractual information (Article 10);
• right of withdrawal (Article 14);
• early repayment (Article 16); and
• calculation of the Annual Percentage Rate (APR) (Article 19).
The Council also introduced other modifications with respect to:
• the scope of the draft directive by, on the one hand, excluding a number of situations in Articles 2 and 20 and, on the other, covering in more detail some specific issues such as advertising (Article 4), overdrafts (Articles 6 and 12) or overrunning (Article 18),
• the level of harmonisation, especially the Commission's proposal to couple full harmonisation with targeted mutual recognition (Article 22),
• the use of comitology (Article 25),
• the transparency on regulatory choices taken by Member States in areas not fully harmonised (Article 26) and the related review clause (Article 27(2)).
In a draft statement dated on the 14th of September the Council outlined in detail the introduced modifications. These include:
• A. Scope (Article 2)
The Council streamlined the scope of the draft Directive (already limited following the exclusion of mortgage credit agreements, surety agreements and guarantors and the introduction of a light regime for overdrafts).
• B. Pre-contractual information (Articles 5 and 6)
The Council considered that consumers should receive sufficient information to allow them to make informed and responsible decisions before signing the contract. <br>
• C. Contractual information (Article 10)
In relation to the changes made to the list of pre-contractual information, the Council also extended the list of information to be provided to the consumer at the time of the conclusion of the credit agreement (mostly in parallel with the additions made in Articles 5(2) and 6(1)).
• D. Right of withdrawal (Article 14)
The Council agreed to provide for a uniform right of withdrawal of 14 calendar days. The Council clarified the obligations of consumers when exercising their right of withdrawal and the interlink with the right of withdrawal provisions in Directives 85/577/EEC (Doostep selling) and 2002/65/EC (Distance selling of financial services). <br>
• E. Early repayment (Article 16)
While recognising the right of a consumer to repay a credit earlier, the Council agreed to grant creditors a limited right to compensation for possible costs directly linked to early repayment (paragraph 2).
• F. Calculation of the APR (Article 19)
The Council provided for a uniform means of calculating the APR and included a standard set of assumptions to be used by credit providers for APR calculations in different circumstances (set out in Annex I, paragraph II). In order to cope with the product innovations and the need to calculate the APR for possible new types of credits in the future, the Council introduced a comitology provision under the regulatory procedure with scrutiny to determine additional assumptions if necessary (new paragraph 5). <br>
• G. Mutual recognition clause (Article 22)
The Council considered that the implementation of a mutual recognition clause as proposed by the Commission, i.e. a clause that would complement the minimum harmonisation on certain specific issues, would not fulfil the objectives of the proposed Directive. It would be too difficult for consumers to understand and might lead to legal uncertainty owing to the application of the law of different Member States.
The Commission accepted the common position agreed by the Council.
The Commission regards the Common Position satisfactory as regards four of the five key issues of the Directive, i.e.:
• Pre-contractual information,
• contractual information,
• APR, and
• the right of withdrawal
are fully harmonised and guarantee a high level of consumer information and protection, while putting in place the conditions for a genuine internal market in consumer credit.
The standardised pre-contractual information form introduced by the Council will provide consumers with a good basis for comparison of offers.
The Commission was in favour of further harmonisation on the issue of early repayment. The Commission did not support the possibility for Member States to maintain or introduce national legislation regarding the validity of the conclusion of credit agreements. However, it considers that the overall compromise found by the Council can be supported, taking into account the progress done on the other key areas and the difficulties to achieve an agreement in Council at all.
Commission statement on Common Position
© Graham Bishop
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