European Union Revises Proposal for Consumer Credit law

BRUSSELS, Belgium – The European Commission has revised its proposal for a law on consumer credit after the European Parliament called for a number of changes.

The new law aims to create a single EU market for consumer credit services so consumers may take out a loan with a bank in another EU member state with the same level of consumer protection.

Under the revised proposal, loans exceeding 100,000 eur and credit agreements where the consumer has to repay within three months without charge are excluded from the regulation.

A set of rules has been introduced to regulate overdrafts, small loans under 300 eur and credit agreements with credit unions.

Member states will no longer be subject to the originally proposed rules on the registration and regulation of financial intermediaries. Instead, they can decide how best to regulate themselves.

Also, they will not have to set up national credit databases. Existing credit databases will have to be opened up to all EU credit companies on a non-discriminatory basis.

The new regulation will replace the 1987 law which has been outpaced by developments in the financial sector. The commission said it hopes that it and the European Council of Ministers will reach a common position on the law by early 2005, allowing the parliament to ratify the law rapidly.