Local Liberal Democrat Euro MP calls for more security on consumer credit (Diana Wallis MEP)

Diana Wallis MEP <info@dianawallismep.org.uk>

Local Liberal Democrat Euro MP calls for more security on consumer credit

January 16, 2008 2:56 PM

Credit cards At its meeting in Strasbourg today, the European Parliament voted in favour of a directive that will lead to common rules on consumer credits throughout Europe. The final document as voted on represents a balance between customer protection on the one hand and the concerns of the credit business on the other.

For seven years the European Union has been struggling to arrive at harmonised regulation for cross border consumer lending through the adoption of the Directive on Consumer Credit. In relation to this Europe-wide law, the European Parliament has joint lawmaking powers with the national governments (so-called co-decision).

Diana Wallis, Liberal Democrat MEP for Yorkshire & the Humber and her party's spokesperson on consumer credits, said:

"This Directive could not come to fruition at a more appropriate moment than now, at a time when the global credit crisis is a matter of real concern. This is especially the case in the UK, where we have the highest level of consumer debt in Europe, are still in the throes of the Northern Rock debacle and where the economic outlook for lenders and borrowers alike looks gloomy.

"At its best this Directive could have the effect of stimulating Europe's credit market by enabling and promoting cross-border consumer lending, providing greater choice of products, whilst always maintaining the backdrop of harmonised consumer protection rules that give consumers the possibility to compare what is on offer and make informed decisions."

The directive improves the rights consumers have when they contract loans. Lenders will have to make all key facts and figures about a consumer loan available to a prospective client presented in a standard format. The amount of credit on which the directive will apply is from € 200 (£150 pounds) - on a proposal from ALDE - up to € 75,000 (£56,250 pounds). Above this amount, national rules will stay in force. The compensation to the bank for an early repayment by the consumer shall be fixed at a maximum of one percent of the credit repaid early.