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The Proposal for a new Directive concerning Credit for Consumers

Published online by Cambridge University Press:  06 March 2019

Kristin Nemeth  and
Helmut Ortner

Extract

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Since 1995 the Commission has repeatedly reviewed the operation of directive 87/102/EEC for the approximation of the laws, regulations and administrative provisions of the member states concerning consumer credit. This was regarded to be necessary mainly for two reasons: firstly, even at the time of the enactment of the original directive its level of protection was lower than in most member states; secondly, the Commission repeatedly emphasised several changes, which had taken place in regard to the credit services sector in recent years. Whereas the previous directive was targeted at the two most common “products” at that time, namely hire purchase agreements and instalment credit and reflected the cash-based society of that time, the range of products presently offered is much more colourful.

Type
European & International Law
Information
German Law Journal , Volume 4 , Issue 8 , 01 August 2003 , pp. 801 - 813
Copyright
Copyright © 2003 by German Law Journal GbR 

References

1 OJ 1987 L 42/48; Cf. COM (95) 117 final; COM (96) 79 final; COM (97) 465 final.Google Scholar

2 COM (2002) 443 final 3. The European legislator was obviously aware of this fact; cf. Art. 15 dir. 87/102/EEC: “This Directive shall not preclude Member States from retaining … more stringent provisions to protect consumers …”.Google Scholar

3 Cf. COM (2002) 443 final 25: “… for some years now the range of credit available has been growing …”; COM (2002) 443 final 2: “… the reports and the consultations show that there are enormous differences between the laws of the various member states in relation to … consumer credit…”. Interesting enough, the same reason was mentioned in the statement of reasons of directive 87/102/EEC: “whereas there has been much change in recent years in the types of credit available to and used by consumers; whereas new forms of consumer credit have emerged and continue to develop”.Google Scholar

4 Cf. Art. 20 of the proposal (credit agreements providing constitution of capital) and Art. 21 (credit agreement in the form of an advance on a current account or a debit account); cf. COM (2002) 443 final 3; Amparo San José Riestra, The new consumer credit directive: a feasible attempt to harmonisation? (http://www.ceps.be/Commentary/Oct02/SanJose.php).Google Scholar

5 Cf. http://www.europa.eu.int/comm/consumers/cons_int/fina_serv/cons_directive/index_en.htm.Google Scholar

6 See press release IP/02/1289 Brussels, 11/09/02 (http://www.europa.eu.int/rapid/start/cgi/gue-sten.ksh?p_action.gettxt=gt&doc=IP/02/1289|0|RAPID&lg=EN&display=), COM (2002) 443 final 5.Google Scholar

7 VerbrKrG, dBGBl I 1990, 2840 as amended. In the meantime most special statutes were implemented into the German Civil Code (BGB). The relevant provisions concerning consumer credit can be found in sections 491 et seq. BGB.Google Scholar

8 KSchG, öBGBl 1979/140 as amended (öBGBl I 2002/111).Google Scholar

9 BWG, öBGBl 1993/532 as amended (öBGBl I 2001/97).Google Scholar

10 VAG, öBGBl 1978/569 as amended (öBGBl 1999/194).Google Scholar

11 ÖBGBl II 1999/260 as amended (öBGBl II 2001/490).Google Scholar

12 Mülbert, ÖBA 1993, 105.Google Scholar

13 Cf. the German Association of credit institutions (Bankenfachverband), http://www.bankenfachverband.de/Artikel/startseite007920.cfm as well as the French Association of Specialised Credit Establishments, Consumer Credit Directive. Brussels threatens economic Growth, European Voice of 31st October/6th November 2002: “In their current wording the directive's provisions appear to have forgotten that consumers are adults.”Google Scholar

14 Up to 75% [other figures mention 50-65%] of the consumers in Europe currently use consumer credit and 30% of consumers enjoy an overdraft facility on their current account. The total amount of these credit arrangements exceeds € 500.000 million, corresponding to more than 7% of GDP. The annual growth rate is overall around 7%; cf. COM (2002) 443 final 3.Google Scholar

15 Cf. the French Association of Specialised Credit Establishments (supra footnote 13; Jean-François Vilain, CEO of Franfinance, a specialised subsidiary of Société Général).Google Scholar

16 See below [7] and [8].Google Scholar

17 Art. 20-22 cover specific credit agreements and modalities which partially also justify certain exceptions of other directive provisions (cf. Art. 16). They shall not be looked at in detail. See, Art. 2 lit a, b and c of the proposal.Google Scholar

18 Art. 3 par 1 of the proposal.Google Scholar

19 Art. 2 lit f of the proposal.Google Scholar

20 Art. 2 lit e of the proposal.Google Scholar

21 Art. 23 para. 1.Google Scholar

22 Art. 23 para. 2.Google Scholar

23 Art. 23 para. 3.Google Scholar

24 For a definition of the term see Art. 2 lit d. See, It should not be forgotten that also Art. 3, 12, 14 of the Directive 87/102 are applicable to credit intermediaries; cf. Knobl, ÖBA 1995, 667 (section 3.1.).Google Scholar

25 Concerning advertisement of the intermediary and fees granted to him.Google Scholar

26 Such as e.g. Art. 6 par 1 (exchange of information in advance and duty to provide advice), Art. 10 (information that must be included in credit and surety agreements), Art. 28 (registration of creditors and credit intermediaries), Art. 33 (burden of proof).Google Scholar

27 Art. 2 par 1 lit f of the Directive 87/102 states that the directive shall not apply to credit agreements involving amounts less than ECU 200,– or more than ECU 20.000,–. This will have to lead to an amendment of the respective Austrian provision in the Consumer Protection Code as well. Also the present directive has already led to changes within the Austrian Consumer Protection Code concerning the respective thresholds stated in § 16 par 1 and § 26b applicable to instalment plans and the sale of periodicals – They were then increased from ATS 150.000,– (now approx. € 11.000,–) to ATS 310.000,–(now € 25.000,–).Google Scholar

28 Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises, OJ 1985 L 372/31.Google Scholar

29 Cf. the French Association of Specialised Credit Establishments (supra footnote 13; Arnaud de Marcellus, chairman of ASF's Surety Committee).Google Scholar

30 Judgement of December 13th 2001, Case C-481/99, Heininger, [2001] ECR I-9945.Google Scholar

31 COM (2002) 443 final 5.Google Scholar

32 Art. 6 para. 1.Google Scholar

33 Titled credit agreement in the form of an advance on a current account or a debit account. Art. 21 of the proposal proposes a standard method for providing information during the term of the credit agreement.Google Scholar

34 … which stipulates a duty to inform the guarantor in time before he is made liable.Google Scholar

35 This clause states the creditor's duty to hand over a detailed statement of account in case of the consumer's non-performance with his obligations or early repayment, allowing him to verify the charges and interest claimed.Google Scholar

36 Information that has to be given in the case of overrunning of the total amount of credit.Google Scholar

37 Cf. the French Association of Specialised Credit Establishments (supra footnote 13; Michel Lecomte, Chairman of ASF).Google Scholar

38 Cf. the French Association of Specialised Credit Establishments (supra footnote 13).Google Scholar

39 Cf. the French Association of Specialised Credit Establishments (supra footnote 13) with regard to the obligation to state three different kinds of rates, which in their opinion “can only confuse consumers”.Google Scholar

40 Art. 11 par 2 of Directive 87/102. It should be mentioned that the Austrian implementation of Art. 11 (§ 18 KSchG) only stipulates the consumer's right to refuse repayment as long as the supplier has not performed his duties.Google Scholar

41 Art. 19 par 2 of the proposal.Google Scholar

42 COM (2002) 443 final 22.Google Scholar

43 COM (2002) 443 final 26 et seq.Google Scholar

44 Recital 28 thereby only refers to the general meaning of the principle of proportionality with respect to Art. 5 EC, i.e. with respect to measures taken by the Community and not specifically to contractual obligations between creditors and consumers.Google Scholar

45 According to Art. 24 par 2 this is not necessary if the consumer is accused of fraud or acting against his obligations arising from the credit agreement; however, it is the creditor who has to provide the evidence for such circumstances.Google Scholar

46 Art. 24 par 1 b) of the proposal.Google Scholar

47 Formerly Art. 9 of Directive 87/102.Google Scholar

48 Cf. supra footnote 30 (Heininger).Google Scholar

49 “Credit providers have neither the means nor services to manage restitution of goods … [This provision] entails a dramatic increase of internal costs for specialised credit establishments, and therefore, at the end of the day, of expenses borne by the consumer…The Directive shows a severe lack of understanding of what actually goes on in the field …” (Cf. supra footnote 13).Google Scholar

50 The statement of reasons of directive 87/02 makes clear that both elements of Art. 8 were of importance: “Whereas the consumer should be allowed to discharge his obligations before the due date; whereas the consumer should then be entitled to an equitable reduction in the total cost of the credit.”Google Scholar

51 Which becomes even more delicate because of the principle of maximum harmonisation; cf. infra [17ff].Google Scholar

52 Art. 30 par 2 and 4 of the proposal.Google Scholar

53 Also called “full harmonisation”; cf. the Consumer Policy Strategy 2002-2006, Communication of 7 May 2002, COM (2002) 208 final (http://europa.eu.int/eurlex/pri/en/oj/dat/2002/c_137/c_13720020608en00020023.pdf). If and to which degree national legislation is allowed to deviate from the regulations of a directive depends on the type of harmonisation intended; cf. Taschner in Groben/Tiesing/Ehlermann (Ed), EU-/EG-Vertrag5, 2/II (1999) Art. 100 EG par. 44; Herrenfeld in Schwarze, Art. 94 EG par. 42 et seq.; C-128/94 (Hönig – Stadt Sockach) [1995] ECR, I-3389 par. 9; C-1/96 (ex parte Compassion in World Farming – Minister of Agriculture, Fisheries and Food([1998] ECR I-1251 par. 49 et seq.Google Scholar

54 Art. 15 of Directive 87/102.Google Scholar

55 National provisions concerning maximum or exorbitant annual percentage rate of charge or any other type of setting or evaluation of maximum or exorbitant rates continue to apply, as these specific aspects are not dealt with in the proposal.Google Scholar

56 Quoted supra note 53.Google Scholar

57 Cf. Craig & de Búrca, EU Law, 3rd ed. (2003) 1195.Google Scholar

58 Similar reasons seem to constitute the background for the European Parliament's fears that the concept of maximal harmonisation could lead to a decline in consumer protection (this is e.g. mentioned by María Sornosa Martínez in an outline for the European Parliament of November 2002, PE 319.393). Another potential problem in regard with the principle is mentioned by the European Mortgage Federation in an official letter regarding the Position Paper on the Green Paper on European Union Consumer Protection (http://www.hypo.org): Despite welcoming the concept (“The efficiency … clearly depend[s] on the condition that it is based on the full (maximum) harmonisation principle, thus eliminating the fragmentation which results from the minimum clause”), it calls into question the possibility to achieve the aim strived for by stating that it still remains unclear if the existing fragmentation resulting from a wide range of often very specific and detailed national legislation really can be suppressed.Google Scholar

59 Rohe, Privatautonomie im Verbraucherkreditrecht wohin?, BKR 2003, 267: Danco, Die Novellierung der Verbraucherkreditrichtlinie, WM 2003, 863; Kaiser, Vorschlag der EU-Kommission für eine Überarbeitung der Verbraucherkreditrichtlinie – Darstellung der wesentlichen Änderungen (http://www.vuronline.de/beitrag/33.html).Google Scholar

60 Art. 30 par 1 a) and b) of the proposal.Google Scholar

61 This is indicated by the wording: “The central database … may include the registration of credit agreements and surety agreements.”Google Scholar

62 The creditor would thus have at his disposal an instrument that is more reliable than a negative database. This would offer him the chance to check, whether a consumer, or possibly a guarantor, has concluded other credit or surety agreements that have not yet been subject to litigation but constitute an obstacle to further credit.Google Scholar

63 Art. 33 of the proposal.Google Scholar

64 Similar provisions can be found in other consumer protection directives (really more than the one mentioned), such as e.g. Art. 15 of Directive 2002/65/EC on the distance marketing of consumer financial services modifying Council Directives 90/916/EEC, 97/7EC and 98/28/EC.Google Scholar

65 E.g. Art. 6 par 2 of Directive 93/13/EEC on unfair terms in consumer contracts, OJ 1993 L 95/29; Art. 12 par 2 of Directive 97/7/EC on distance marketing, OJ 1997 L 144/19; Art. 7 par 2 of Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees, OJ 1999 L 171/12; Art. 12 par 2 of Directive 2000/65/EC on the distance marketing of financial services, OJ 2002 L 271/16.Google Scholar

66 However, par 5 makes clear that for this rule to apply, it is important that the agreement has a close link with the jurisdiction of one or more member states.Google Scholar

67 It is explicitly stated that circumvention of the application of the directive shall be prevented (Art. 30 par 3), both substantially as well as by choosing the applicable law (Art. 30 par 5).Google Scholar

68 Art. 30 par 3 of the proposal explicitly admonishes the member states to make sure that the provisions of the proposal cannot be circumvented.Google Scholar

69 COM (2002) 443 final 28.Google Scholar

70 Cf. supra section II.Google Scholar