Memo: Consumer Affairs: Council due to consider Consumer Credit Directive

Consumers across Europe would be better able to make well informed choices when taking out consumer credit loans - paying for holidays, weddings or a new car – under new rules to be considered by the EU Council of Ministers on 21 May 2007. The proposed EU Directive on Consumer Credit Loans aims to break open the €800 billion-a-year EU consumer loans market which remains largely fragmented into national markets denying consumers choice and more competitive prices. The new rules will make the market more transparent for consumers and business competitors. The main effect will be to provide standard, comparable information to customers across the EU taking out credit loans. In particular, consumers will be assured access to key facts and figures in advertisements; for credit offers, the information given to consumers (for instance interest rates, amount, number and frequency of payments, the obligation to take out an insurance or the charges for defaulting) must be set out in a new comparable EU-wide European Credit Information Form; and consumers will benefit from a single, comparable, EU wide Annual Percentage Rate of Charge. The proposed Directive also sets common standards on a right of withdrawal so consumers can change their mind. This Consumer Credit Directive is part of a bigger drive to boost the cross border market in retail financial services as set out in the recently published Green Paper on Retail Financial Services.