Consumer credit consultation from DTI

The Commission's proposals are in the early stages of negotiation but the UK Government wants to ensure that the end result is compatible with the Government's ongoing reform of the UK consumer credit market – in particular the Consumer Credit Bill, which is independent of the Directive and was introduced to Parliament in December.

The DTI will use responses received to the consultation to develop its negotiating position in respect of the draft Directive.

According to the Commission, the existing EU rules on consumer credit have not kept pace with changes in the sector and no longer provide sufficient protection for consumers, with the result that they have been largely overtaken by national regulations.

The Commission says that this means there are fewer cross-border transactions, and that there are differences in consumer protection across the Member States. An updated EU-wide regime is therefore necessary.

The Commission put forward a proposal for a revised consumer credit Directive in September 2002 and, following changes proposed by the European Parliament, adopted an amended draft in October last year.

In general terms, the draft covers:

• information and practices preliminary to the formation of credit agreements;
• data sharing;
• contractual information requirements;
• calculation of Annual Percentage Rate (APR) charges;
• unfair terms; and
• licensing of creditors and credit intermediaries.

The consultation closes on 22nd April 2005.