European legislation harmonises the general conditions relating to consumer credit, including the main information consumers ought to be aware of, and their obligations. This information includes the annual percentage rate of charge or, failing that, the total amount that the consumer must pay for credit.
The Directive aims to bring about a certain degree of approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit.
The Directive does not cover:
- credit agreements for the purpose of acquiring or retaining property rights in land or a building;
- credit agreements for the purpose of renovating or improving a building;
- hiring agreements which do not provide for the title passing to the hirer;
- credit free of interest or any other charge;
- interest-free credit agreements where the consumer repays the credit in a single payment;
- credit in the form of advances on a current account granted by a credit institution or financial institution, with the exception of credit card accounts;
- credit agreements involving amounts less than EUR 200 or more than EUR 20 000;
- credit agreements whereby the consumer undertakes to repay the credit either within three months or by a maximum of four payments within a 12-month period.
Member States may also exclude from the scope of the Directive certain types of credit which are granted at rates of charge below those prevailing in the market and which are not offered to the public generally.
Any credit-related advertising that indicates some aspect of the cost of the credit must also include a statement of the annual percentage rate of charge.
Credit agreements are to be made in writing. Besides the essential terms of the contract, an agreement must state the annual percentage rate of charge and the conditions under which it may be amended.
Where credit is granted in the form of an advance on a current account, the consumer is to be informed in writing, at or before the time the agreement is concluded:
- of the credit limit, if any,
- of the annual rate of interest and the charges applicable,
- of the procedure for terminating the agreement.
Any change in the annual rate of interest or in the relevant charges, during the period of the agreement, must be notified to the consumer at the time it occurs.
In the case of credit granted for the acquisition of goods, Member States must lay down the conditions under which the goods may be repossessed and are to ensure that neither of the parties gains any unjustified enrichment.
The consumer may discharge his or her obligations under a credit agreement before the time fixed by the agreement. In this event, the consumer is entitled to an equitable reduction in the cost of the credit.
Where the creditor's rights are assigned to a third person, the consumer's rights remain unaffected and action to enforce any claim may be taken against that third person.
The Member States must ensure:
- that consumers using bills of exchange are suitably protected, when such practices are allowed;
- that the existence of a credit agreement does not affect the rights of the consumer vis-à-vis the supplier of goods or services purchased by means of such an agreement in cases where the goods or services are not supplied or are not in conformity with the contract.
The consumer may seek redress against the grantor of credit when the following conditions are fulfilled:
- the consumer has entered into a credit agreement with a person other than the supplier of the goods or services purchased;
- the grantor of the credit and the supplier of the goods or services have a pre-existing agreement under which credit is made available exclusively by the former;
- the consumer obtains his or her credit pursuant to that pre-existing agreement;
- the goods or services covered by the credit agreement are not supplied or are not in conformity with the contract;
- the consumer has sought redress against the supplier but has failed to obtain satisfaction.
The Member States are to:
- ensure that persons offering credit obtain official authorisation to do so;
- ensure that the persons in question are subject to inspection by an official body;
- promote the establishment of appropriate bodies for providing information and advice to consumers in respect of credit agreements and for receiving associated complaints.
The Council is required to revise the amounts laid down in the Directive, for the first time in 1995, and every five years thereafter.
The Member States must ensure that the rules set out in the Directive:
- are complied with in credit agreements;
- are not circumvented as a result of the way in which agreements are formulated, e.g. by the device of distributing the amount of credit over several agreements.
The Member States may introduce more stringent rules than those laid down in the Directive.
Directive 90/88/EEC sets out a single mathematical formula for calculating the annual percentage rate of charge throughout the Community and for determining credit cost items to be used in the calculation.
Directive 98/7/EC focuses on the calculation of the annual percentage rate of credit charge.
|Act||Entry into force||Deadline for transposition in the Member States||Official Journal|
|Directive 87/102/EEC||12.01.1987||01.01.1990||OJ L 42 of 12.02.1987 Corrigendum OJ L 278 of 11.10.1988|
|Amending act(s)||Entry into force||Deadline for transposition in the Member States||Official Journal|
|Directive 90/88/EEC||01.03.1990||31.12.1992||OJ L 61 of 10.3.1990|
|Directive 97/7/EC||04.06.1997||4.6.2000||OJ L 101 of 1.4.1998|
|Directive 98/7/EC||21.4.1998||21.4.2000||OJ L 101 of 1.4.1998|