UK set for battle with EU over credit laws

Date: 21/11/02

By Martin Banks

THE European Commission is on a collision course with the UK over Brussels' plans to harmonise consumer credit laws.

Under the terms of the Consumer Credit Act, British consumers have the right to seek compensation from credit card providers if they have problems with goods or services bought with their cards.

But this little-known perk is set to disappear if a Commission proposal becomes law.

The UK's Department of Trade and Industry (DTI), Office of Fair Trading, Financial Ombudsman and Consumers' Association have expressed concern at the planned directive, due to come into force within three years.

The DTI said it is determined to preserve 'Section 75', the clause which guarantees the right to compensation.

Mike Naylor, of the Consumers' Association, said: 'Section 75 is vital because, if the retailer goes bust or refuses to give a refund, the consumer has another door to knock on.

'There is a clear relationship between the retailer and the card provider. The banks cannot absolve themselves from responsibility when something goes wrong.'

A Commission spokesman said: 'The Commission was aware at the time of drafting that the UK offered this type of consumer protection. But it is inevitable that, where harmonisation takes place, certain legal privileges in individual countries have to go.'

The European Commission is on a collision course with the UK over plans to harmonise consumer credit laws.