CONSUMER POLICY

On Monday 2 December the European Commission launched an information campaign on consumer credit in Cyprus. "Need credit? Don't just sign. You have rights" is the slogan of this campaign and the main purpose is to raise awareness amongst young adults, aged between 18 and 35, of their rights before they sign a credit agreement. These rights stem from the Consumer Credit Directive (Directive 2008/48/EC) which came into force in June 2010 and which applies to credit between €250 and €75.000.

Neven Mimica, European Commissioner for Consumer Policy, said: "When it comes to financial services, the choices consumers make can have a great impact on their lives. We want to empower consumers to choose the right credit product and avoid debt, but to achieve this we first need to make them aware of their rights."

The campaign focuses on five key rights:

• The right to transparent advertising,
• The right to receive standardised and comparable information before signing a contract,
• The right to clear information in the contract,
• The right to withdraw from an agreement within 14 days without explanation,
• And the right to repay early.

A recent survey¹ showed that about 35% of Cypriot consumers took out credit in the past two years. However, about 70% did not feel informed about their credit rights and 50% did not feel confident enough to choose the right product for them. Also, around six in ten respondents considered it is time-consuming and difficult to compare credit offers.

This is why today the European Commission launched an information campaign on consumer credit in Cyprus which will also run in Malta, Ireland and Spain until March 2014.

Background

The Consumer Credit Directive aims to harmonise the laws, regulations and administrative provisions of the Member States covering credit for consumers, in order to facilitate cross-border services. It is also aimed at increasing the transparency of contractual conditions and improve the level of consumer protection.

The Directive provides for a comprehensible set of information to be given to consumers in good time before the contract is concluded and also as part of the credit agreement. For example, in order to enhance the comparability of different offers and to make the information better understandable, the pre-contractual information needs to be supplied in a standardised form (Standard European Consumer Credit Information).

Furthermore, this Directive foresees two essential rights for consumers: they are allowed to withdraw from the credit agreement without giving any reason within a period of 14 days after the conclusion of the contract. They also will have the possibility to repay their credit early at any time, while the creditor can ask for a fair and objectively justified compensation.

Member States were asked to transpose the Consumer Credit Directive into national law before 12 June 2010.

For more information please visit:

• http://ec.europa.eu/katanalwtikhs-pisths
• http://ec.europa.eu/consumers/rights/fin_serv_en.htm#credit

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¹ Survey on "consumer credit rights", TNS Opinion, April 2013, available at: http://ec.europa.eu/katanalwtikhs-pisths