Memo: Consumer Affairs: European Parliament to vote on Consumer Credit Directive (Wednesday 16th January 2008)

Consumers across Europe would be able to make better informed choices when they take out consumer credit loans - paying for holidays, weddings or a new car - following a vote in the European Parliament on Wednesday 16th January 2008. The proposed EU Directive on Consumer Credit Loans aims to break open the €800 billion 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 a credit loan. Under the new rules, consumers will be assured access to key facts and figures in advertisements. For credit offers, the information given to consumers (e.g 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 there will be a new single EU-wide method for calculating the (APR) Annual Percentage Rate of Charge so consumers can see the real cost of credit. 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 Green Paper on Retail Financial Services adopted by the Commission in December 2007.