EU harmonises consumer-credit rules[fr][de] 

The EU agreed to harmonise the €800 billion consumer-credit market on 21 May 2007, allowing consumers to have the same rights and compare offers across the EU.

German Justice Minister Brigitte Zypries, who chaired the meeting of ministers in charge of competitiveness, stated: "This agreement delivers clear practical advantages to Europe’s consumers. For example, in future it will be possible to make genuine comparisons among credit offers throughout Europe."

She added: "Credit providers will be subject to uniform transparency rules and the annual percentage rate of charge for credit will be calculated in accordance with uniform standards."

During negotiations, the issue of early repayment emerged as one of the main sticking points. The compromise-formula grants creditors a limited right to compensation for early repayment of credit. Moreover, member states can limit the compensation claim to cases in which the amount of repayment within 12 months exceeds a maximum €10,000 threshold.

Consumer credit rates currently range from 6% in Finland to 12% in Portugal. However, few European consumers are likely to reap the benefits of harmonised rules, as consumer credit remains a local business, with less than 1% of transactions currently being made across borders.

"However", Zypries said, "this directive will make it easier for the growing proportion of mobile citizens and users of internet banking services to identify opportunities beyond the borders of their national credit markets."

Due to the great variation of consumer credit rules, especially on early repayment, member states struggled to find an agreement. Even though a political agreement was found, the Dutch and Greek delegations voted against the proposal and Belgium and Luxembourg abstained.

Consumer Commissioner Meglena Kuneva said: "At the moment, trying to compare different credit offers across the European market is like trying to compare apples and pears. Standard, comparable information for all EU credit loans will make the market more transparent for business and consumers."

Conservative MEP Malcom Harbour is critical of the directive and said: "Whilst Conservatives have always welcomed the opening up of new markets, the views of the financial services sector must be properly taken into account through an impact assessment. Both the Commissiona and the Council failed to look at what the consequences of this directive would be when they should have done so."

Tanguy van de Werve, director general of European consumer credit provider association Eurofinas argued that under the agreed rules, consumers who buy a TV with a credit at the point of sale would end up having to "wait 14 days before being authorised to carry it away".

Xavier Durieu, secretary-general of European retail association EuroCommerce, said: "By trying to find a consensus at any cost, the council risks giving birth to a text that will betray the former expectations of business and consumers alike."

The European Federation of Building Societies (EFBS) criticised the compromise text for not helping to build a single European market for consumer credit. Andreas Zehnder, managing director of the federation, said: "The existing patch-work text has simply been replaced by another one."