1. Proposal for a Directive on credit agreements for consumers Table of contents A. The history of the proposal and the state of play B. Objectives and scope of application of the proposal C. The main provisions of the proposal D. The new environment for the consumer credit E. Synergies with other Directives

2. A. The history of the proposal and the state of play 2002: a proposal was adopted by the Commission for a Directive of the Parliament and of the Council on harmonisation of the laws, regulations and administrative provisions of the Member States for credit for consumers. 2003: In the Council of 19 May 2003 a policy debate took place on a few major issues. 2004: The European Parliament adopted its 182 amendments in first reading 2004: following the European Parliament 1st reading opinion, the Commission adopted its modified proposal

3. A. The history of the proposal and the state of play 2005: The Commission has published a second revised proposal. This new text is a consolidated version, based on the first modified proposal but including a number of significant changes further to consultations led in 2005 with the concerned stakeholders. May 2007: Political agreement by the Council September 2007: Common position adopted by the Council December 2007: Plenary of the European Parliament ???

4. B. Objectives and scope of application of the proposal Repealing of Directive 87/102/EEC on consumer credit Objectives of the Directive: to establish a forward-looking Community legislation which is able to adapt to future forms of credit and which allows MS the appropriate degree of flexibility to offer sufficient degree of consumer protection and to ensure consumer confidence to create the optimum conditions for the free movement of credit offers for both those who offer credit and those who require it

5. B. Objectives and scope of application of the proposal Scope of application The Directive does not apply to mortgage credit The Directive does not apply to credit agreements involving a total amount of credit less than EUR 200 or more than EUR 100.000 The Directive does apply partially to credit agreements in the form of an overdraft facility

6. C. The main provisions of the proposal The proposal includes provisions on the following issues: (a) Information to be provided by the creditor to the consumer with respect: to advertising of credit agreements which indicate an interest rate or any figures relating to the cost of the credit to the consumer at a pre-contractual level (differentiation between classic credit agreements and credit agreements in the form of an overdraft facility) in the credit agreement (differentiation between classic credit agreements and credit agreements in the form of an overdraft facility) with respect to the borrowing rate

7. C. The main provisions of the proposal (a) Differences with respect to the Directive 87/102/EEC the establishment of the obligation of pre- contractual information differentiation of the information to be provided depending on whether it concerns classic credit agreements or credit agreements in the form of an overdraft facility the establishment of very detailed information requirements the establishment of standard information to be included in advertising and to be provided at pre- contractual level

8. C. The main provisions of the proposal (b) The legislative intervention with respect to the regulation of certain contractual rights of the consumer right of withdrawal (period of 14 days) (this right is not regulated in Directive 87/102/EEC) linked credit agreements: where the consumer has exercised a right of withdrawal concerning a contract for the supply of goods or services, he shall no longer be bound by a linked credit agreement

9. C. The main provisions of the proposal (b) The legislative intervention with respect to the regulation of certain contractual rights of the consumer right of early repayment the consumer shall be entitled at any time discharge fully or partially his obligations under a credit agreement the creditor shall be entitled to compensation for possible costs directly linked to early repayment of credit provided that the early repayment falls within a period for which the borrowing rate is fixed under the conditions provided for by the Directive Different provision than those provided for in Directive 87/102/EEC

10. C. The main provisions of the proposal (b) The legislative intervention with respect to the regulation of certain contractual rights of the consumer open-end credit agreements: the consumer may effect standard termination of an open-end credit agreement free of charge at any time unless the parties have agreed on a period of notice, which may not exceed one month

11. C. The main provisions of the proposal (c) Obligations of the creditor Obligation to assess the creditworthiness of the consumer Before the conclusion of the credit agreement, the creditor shall assess the consumers creditworthiness: on the basis of sufficient information, where appropriate obtained from the consumer and, where necessary, on the basis of a consultation of the relevant database

12. C. The main provisions of the proposal (c) Obligations of the creditor the creditor and, where applicable, the credit intermediary provide adequate explanations to the consumer in a position enabling him to assess whether the proposed credit agreement is adapted to his needs and to his financial situation: where appropriate by explaining the pre- contractual information to be provided, the essential characteristics of the products proposed, and the specific effects they may have on the consumer, including the consequences of default in payment by the consumer

13. C. The main provisions of the proposal (c) Obligations of the creditor MS may adapt the manner by which and the extent to which: such assistance is given, and by whom to the particular circumstances of the situation in which the credit agreement is offered, the person to whom it is offered and the type of credit offered.

14. C. The main provisions of the proposal (c) Obligations of the creditor if the credit agreement is rejected on the basis of consultation of a database, the creditor shall inform the consumer immediately and without charge of the result of such consultation and of the particulars of the database consulted, unless the provision of such information is prohibited by other Community legislation or is contrary to objectives of public policy or pubic security

15. C. The main provisions of the proposal (d) Other issues detailed provisions on the calculation of the annual percentage rate of charge certain obligations of credit intermediaries vis-à-vis consumers out-of-court dispute resolution

16. D. The new environment for the consumer credit standardised information requirements obligation to assess the creditworthiness of the consumer obligation to assist the consumer partial application of the principle of maximum harmonisation comitology procedure

17. D. Synergies with other Directives The regulatory framework which applies to consumer credit includes also the following Directives: Directive on advertising Directive 2002/65/EC on distance marketing of financial services Directive 2005/29/ΕC on unfair commercial practices