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."
