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Consumer Credit

Rules for the 21st century

The European Commission adopted in September 2002 a proposal for a new directive on consumer credit. The existing EU-wide rules from 1987 have not kept pace with the important evolution in this sector and, at the same time, only set minimum standards. They have largely been overtaken by national regulation. The absence of common rules reduced cross-border transactions and led to differences in consumer protection in Member States.

New EU-wide rules for consumer credit will be expanded to modern forms of consumer credit today. Home loans remain outside the scope. Borrowers will gain improved transparency on products (costs, terms and conditions) and can more easily compare offers on a cross-border basis. Lenders will gain improved opportunity to assess borrower risk, but in return they will be subject to ”know thy client“ obligations before granting any credit. Consumers will also have the right of withdrawal within 14 days, free of charge and without justification. Harmonised consumer credit rules throughout the Union will not only increase the protection of consumers across borders but also their confidence and thus strengthen the functioning and the stability of the consumer credit market in the European Union.