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Brussels, 5 November 2003

10 points on the Commission's proposal for a consumer credit directive

    Citizens would be denied access to credit in particular, the poorest sections of society

Wrong. The proposed Directive simply says that consumers would have to be informed about the conditions of credit, and that lenders would have to make an assessment of the consumer's ability to repay. Such assessments are already common practice within the industry.

It is in nobody's interest neither the lender nor the borrower to enter into an agreement which the borrower cannot repay.

Some banks feel that assessing the borrower's ability to repay would increase their costs. However, this is nothing more than good business practice, for which many Member States already have detailed legal requirements.

    The Directive would have a negative impact on spending

Unfounded. If anything, the reverse is more likely. The Directive would create equal conditions for consumers and lenders across the entire EU, making the market more liquid. Opportunities and choice for granting and obtaining credit would increase rather than decrease.

    Interest rates would go up

Untrue. There is little evidence to suggest that compliance costs for this proposal would be higher than those for current national legislation or that this would create upward pressure on interest rates. Rather, increased competition will have the effect of driving down interest rates.

    The right of withdrawal would allow consumers to use a product for two weeks and then return it to the shop saying “I withdraw

Misunderstanding. The right of withdrawal relates only to the credit contract, not a right to withdraw from the sales contract.

    The Directive would be detrimental for credit unions and social lending

Incorrect. The Commission believes that the Directive should have a broad and general scope. There would not appear to be any obvious reasons for exempting credit unions from informing consumers and assessing their ability to repay. The Commission is willing to consider specific exemptions on their individual merits.

    No impact assessment was done

False. The Commission's preparatory work for this initiative started in 1995. Internal studies were undertaken and six studies from outside experts were commissioned. Member States, financial institutions, consumer organisations and MEPs were all consulted. Consultative documents were issued and hearings took place prior to adopting the proposal.

    Full harmonisation will lower consumer protection standards in many EU Member States

Ungrounded. The proposal aims to enhance consumer confidence in the field of credit. The consultations and analyses which preceded this proposal pointed to genuine harmonisation as the key to unlock the credit market within the single market to the benefit of both borrowers and lenders. Full harmonisation based on a high level of consumer protection will create common ground for the market to operate freely.

The Commission is open to suggestions that would contribute to the twin objectives of ensuring a high level of consumer protection and facilitating the operation of the single market.

    The Commission Services have acknowledged flaws in this proposal and have already accepted or made changes to it

Not true. The Commission services sought to inform Parliament of developments in the Council, as had been requested by the EP Committees. To date, no decisions have been taken on any amendment of the proposal. There is no alternative proposal.

    The Commission is trying to deprive the EP of its right to a first reading

No. Quite the opposite. This misconception is based on the erroneous assumption that the Commission has abandoned its proposal and is working on a new one. This is untrue. Parliament's opinion is sought on the proposal as it stands.

    Parliament will have to re-write the proposal substantially

Wrong. This allegation is based on the view that the proposal is invalid or incomplete. Neither the Council nor the Commission shares this view.

Parliament is not being asked to re-write the Commission's proposal. The Commission is willing, as always, to consider any changes that the Parliament thinks appropriate. However, this willingness does not mean that Commission doubts the validity of its own proposal.

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