No C 113/22 Official  Journal  of the European  Communities 7. 5. 80 
Opinion  on the proposal  for a Council  Directive  relating  to the approximation  of the laws, 
regulations  and  administrative  provisions  of the Member  States  concerning  consumer 
credit 
The text  referred  to the Committee  has been  published  in Official  Journal  of the Euro-
pean  Communities  No  C 80 of 27 March  1979,  page  4. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 12 March  1979  the Council  referred  the abovementioned  proposal  to the Economic 
and Social  Committee  in accordance  with  Article  100  of the Treaty  establishing  the 
European  Economic  Community. 
B. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its opinion  on the above  matter  at its 
175th  plenary  session  held  in Brussels  on 30 and  31 January  1980. 
The full  text  of the opinion  is as follows: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to the Treaty  establishing  the Euro-
pean  Economic  Community,  and  in particular 
Article  100  thereof, 
Having  regard  to the request  made  by the Council  of 
the European  Communities  on 12 March  1979  for an 
opinion, 
Having  regard  to the decision  taken  by its Bureau  on 
22 March  1979  instructing  the Section  for Protection 
of the Environment,  Public  Health  and  Consumer 
Affairs  to draw  up an opinion  on the matter, 
Having  regard  to the opinion  issued  by the Section 
for Protection  of the Environment,  Public  Health 
and Consumer  Affairs  on 8 January  1980, 
Having  regard  to the report  submitted  by the rappor-
teur,  Mr Ramaekers, 
Having  regard  to the discussions  at its 175th  plenary 
session  held  on 30 and  31 January  1980  (meeting  of 
30 January), 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
by 69 votes  to 11 with  23 abstentions: 
1. GENERAL  COMMENTS 
1.1. The  Committee  points  to the considerable  im-
portance  of consumer  credit  in present-day  society 
and to its exceptional  growth  over  the last 20 years  in 
terms  of both  volume  and  new  forms  of credit. 1.2. The  Committee  is conscious  that  excessive 
growth  of consumer  credit  may  possibly  lead  to con-
sumers  getting  too far into  debt  and that  there  may  be 
imbalance  between  the  parties  to consumer  credit 
agreements.  Yet it stresses  that  the rapid  expansion  of 
consumer  credit  has had  the direct  result  of enabling 
consumers  to buy  new  goods  and  services  and  in so 
doing  improve  their  standard  of living. 
1.3. In  this  context,  the Committee  approves  the 
Commission's  joint  objective  of using  the measures 
proposed  in the Directive  to protect  consumers  and 
preserve  fair  competition  between  credit  establish-
ments. 
1.4. On  a more  specific  level,  the Committee,  being 
keen  on full  harmonization  in this  sphere,  welcomes 
the Commission's  global  approach  which  takes  in all 
credit  transactions. 
The Committee  is also  conscious  of the importance 
of allowing  the consumer  to make  his choice  in the 
knowledge  of the  facts  and  of thereby  permitting 
competition  to play  its normal  role  through  market 
transparency.  It stresses  the need  for consumers  to be 
fully  informed  of the terms  on which  they  are offered 
consumer  credit. 
1.5. The  Committee  observes  that  the Directive  con-
tains  no provisions  on several  problem  areas  which  it 
considers  to be important.  For instance,  free  access  to 
credit  and  the corollary  of a ban  on discrimination 
on the grounds  of race,  sex,  marital  status  or nation-
ality;  data  banks  and  measures  to ensure  privacy; 
ability  to suspend  payments  in the event  of the con-
7. 5. 80 Official  Journal  of the European  Communities No C 113/23 
sumer  getting  into  social  difficulties.  The Committee 
has been  notified  by the Commission  representatives 
that the  Commission  is studying  these  matters.  It 
keenly  awaits  the outcome  of this  work. 
In addition,  the Committee  regrets  that  the Directive 
does  not contain  a provision  on a cooling-off  period. 
The Committee  is however  aware  that  the introduc-
tion of such  a provision  is fraught  with  difficulties 
and that  its implementation  transcends  the sphere  of 
consumer  credit.  It asks  the  Commission  to look 
further  into  this  matter  and  make  proposals  in due 
course. 
1.6. Lastly,  on a more  formal  note,  the Committee 
deplores  the  lack  of precision  in the  drafting  of 
several  concepts. 
2. SPECIFIC  COMMENTS 
2.1. Scope  of the Directive  (Articles  1 and 2) 
2.1.1.  Definition  of 'consumer'  (Article  1 (2) (a)) 
As the intention  of Article  1 (2) (a) is to demarcate  the 
scope  of the Directive,  the matter  would  be made 
clearer  and  the courts  would  have  better  guidance  if 
the 'consumer'  was  defined  as a natural  person  not 
acting  in a commercial  or professional  capacity  nor 
holding  himself  out as so acting. 
2.1.2.  Definition  of "credit  agreement'(Article  1 (2) 
(c)) 
The Committee  approves  this  definition.  As far as 
fundamentals  are concerned  and  after  making  the 
necessary  exceptions,  it covers  all types  of credit. 
The Committee  stresses  that  it is important  that  the 
consumer  should  enjoy  equal  protection  in all cases 
and that  all distortions  of competition  should  be 
avoided;  no form  of credit  should  be advantaged 
with respect  to others. 
2.1.3.  Application  of the Directive  to agreements 
for the supply  of goods  or the provision  of 
services  (Article  1 (3)) 
The Committee  approves  the  proposed  inclusion 
within  the scope  of the Directive  of agreements  for 
the supply  of goods  or services  which  are financed  by 
means  of a credit  agreement  between  a creditor  and a 
consumer,  in so far as the creditor  cooperates  with 
the supplier  in the performance  of the agreement  for the supply  of goods  or services.  The  Committee 
points  out that,  in the consumer's  eyes,  a credit  agree-
ment  relating  to the purchase  of goods  or services  is a 
single  transaction  by means  of which  he acquires  the 
goods  or services  and  obtains  credit. 
The Committee  agrees  with  the Commission  that,  pri-
marily,  everything  will  hinge  on the particular  facts 
of any  given  case.  All the same,  on a more  general 
level,  the Committee  considers  that  there  should  be 
deemed  to be 'cooperation'  between  the supplier  and 
the creditor  whenever  they  cooperate  with  full 
knowledge  of the relevant  facts. 
2.1.4.  Application  of the Directive  to brokers 
(Article  1 (4)) 
The Committee  prefaces  its comments  by pointing 
out that  it is not correct  in law  to speak  of a credit 
agreement  made  between  a broker  and  a consumer. 
The contract  is always  between  the creditor  and  the 
consumer. 
In addition,  the Committee  considers  that  the term 
'broker'  (French,  'intermediate')  ought  to be given 
its widest  possible  meaning.  The  Directive  should  be 
operative  whatever  the intermediary,  agent  or broker. 
The only  consideration  must  be that  all credit  agree-
ments  — whether  made  immediately  or mediately 
with the creditor  — must  be subject  to the Direc-
tive. 
2.1.5.  Exclusion  of credit  for  the  acquisition  of 
property  rights  in  land  or  buildings 
(Article  2(1)  (a)) 
The Committee  considers  that,  in this connection,  the 
form  of the loan  — i.e. mortgage  as opposed  to other 
forms  of credit  — should  be distinguished  from  the 
use to which  it is to be put.  The  latter  is much  more 
difficult  to determine  and restrict  and should  not be a 
criterion  of the Directive. 
Accordingly,  the  Committee  considers  that  what 
should  be excluded  is mortgage  loans,  which  are al-
ready  the subject  of specific  regulations. 
Yet the Committee  considers  that  credit  agreements 
intended  to finance  the improvement  or renovation 
of buildings  ought  to come  within  the scope  of the 
Directive  since  this  is consumer  credit  and  not credit 
intended  for the acquisition  of property  rights  in land 
or buildings. 
As far as the latter  type  of agreement  is concerned, 
the Committee  considers  that  this is a very  particular 
area calling  for a specific  Directive. 
No C 113/24 Official  Journal  of the European  Communities 7. 5. 80 
2.1.6.  Exclusion  of  hiring  agreements  (Article 
2(D(b)) 
The Committee  considers  that,  whilst  some  sort  of 
protection  should  be envisaged  in connection  with 
hiring  agreements  having  regard  to the  potential 
abuses,  the legal  rules  brought  into  play  by a pure  hir-
ing contract  differ  so much  from  those  which  apply 
to the ordinary  type  of consumer  credit  that  there 
could  be no question  of including  such  agreements 
within  the scope  of the Directive.  The  Committee 
considers  that  the only  solution  would  be a specific 
Directive.  In any  event,  this exclusion  must  not en-
courage  the development  of leasing  and  hire  pur-
chase  agreements,  which  would  result  in the Direc-
tive being  circumvented. 
2.1.7.  Exclusion  of agreements  covering  amounts 
outside  upper  and  lower  cut-off  points 
(Article  2(1)  (e)) 
The Committee  appreciates  that  the absence  of this 
exclusion  would  cause  very  great  difficulties  for 
credit  establishments. 
The Committee  also  approves  of the proposed  proce-
dure whereby  the Commission  could  only  exclude 
such contracts  at the request  of the Member  State 
concerned.  It considers  that  this  procedure  will  not 
detract  from  the necessary  coordination  at European 
level  while  enabling  account  to be taken  of the rele-
vant national  requirements. 
Furthermore,  it considers  that  in any  event,  the 
measures  taken  by the Member  States  must  not lead 
to too many  agreements  being  excluded  from  the 
the Directive. 
2.1.8.  Exclusion  of agreements  under  which  the 
consumer  has three  months  or less in which  to 
pay the price  (Article  2(1)  (c)) 
The Committee  considers  that the procedure  adopted 
in respect  of Article  2 (1) (e) (exclusion  of agreements 
covering  amounts  outside  upper  and  lower  cut-off 
points)  should  also  apply  to Article  2 (1) (c) (exclu-
sion of agreements  under  which  the consumer  has 
three  months  or less in which  to pay the price).  The 
Committee's  grounds  are the same  as those  given  in 
paragraph  2.1.7. 
The Committee  points  out that excluding  agreements 
on the basis  of their  value  or duration  has implica-
tions  of which  account  must  be taken  at national 
economic  level,  e.g. as an instrument  of economic 
policy. 2.1.9.  Obligation  on Member  States  to ensure  that 
the Directive  is not circumvented  (Article 
2(2)) 
The Committee  approves  the principle  behind  this 
provision  but considers  that  it should  apply  to the 
whole  series  of exclusions  and not merely  to the ex-
clusion  of agreements  covering  amounts  outside  up-
per and  lower  cut-off  points. 
It further  considers  that express  recourse  to the Mem-
ber States  is unnecessary  since  that  it is in the very 
nature  of a Directive  to lay down  objectives  for the 
Member  States  to incorporate  in legislation.  It con-
siders  that it is enough  to stipulate  that the provisions 
of the Directive  apply  when  an attempt  is made  to cir-
cumvent  it by means  of the exclusions. 
2.1.10.  Advances  on  a current  account  (Article 
2 (1) (d) and Article  8) 
The Committee  considers  advances  on current  ac-
count  to be an important  form  of consumer  credit 
and it approves  the Commission's  proposal  that they 
should  be subject  to special  requirements  given  their 
particular  characteristics.  It stresses  the importance 
of information  and that  it is essential  that such  infor-
mation  be kept  up to date.  It considers  that the use of 
statements  is well  suited  to the requirements  of this 
type of credit. 
2.1.11.  Credit  cards  (Article  6 (2) (b)) 
The Committee  stresses  that  a distinction  should  be 
made  between  payment  cards  and  credit  cards 
proper.  The difference  lies in the time  for repayment 
and whether  payment  can  be made  in instalments. 
The Committee  points  out that  there  exist  hybrid 
cards  which  offer  both  facilities. 
In this  connection,  the Committee  notes  that  pay-
ment  cards  proper  are excluded  from  the scope  of the 
Directive  because  of Article  1 (2) (c) (agreements 
only to be credit  agreements  if there  is more  than  one 
instalment)  and  Article  2(l)(c)  (agreements  under 
which  consumer  has less than  three  months  to pay ex-
cluded). 
The Committee  considers  that  the Directive  should 
not be undermined  by having  credit  cards  excluded 
from  its scope. 
However,  it considers  that,  in view  of the way  in 
which  they  operate,  credit  cards  should  be subject  to 
special  information  requirements.  The  information 
required  should  be as little  and as effective  as possi-
ble. 
The Committee  compares  the operation  of credit 
cards  to that  of advances  on current  account.  It con-
7. 5. 80 Official  Journal  of the European  Communities No C 113/25 
siders  that  the information  should  be given  in the 
same  way  as for current  accounts  and  that  Article  8 
and Article  2 (1) (d) should  be amended  accord-
ingly. 
Thus  information  would  be given  in writing  on termi-
nation  of the agreement  and  by means  of statements 
during  the contract. 
2.2. Definition  of'effective  annual  rate  of interest' 
(Article  1 (2) (d)) 
As regards  the concept  of the 'effective  annual  rate  of 
interest',  the Committee  considers  that both  the terms 
of the proposed  definition  and the nature  of the con-
cept will  be liable  to result  in a distortion  of con-
sumer  information.  The  Committee  therefore  pro-
poses  that it be replaced  by 'rate  of charge'  or 'annual 
percentage  charge'.  This  charge  should  be defined  to 
mean  the total  cost  of the credit  expressed  "as an an-
nual percentage  of the amount  of the credit  granted 
including  interest  and  other  charges;  the charges  to 
be included  in the calculation  and the method  of cal-
culation  shall  be determined  in accordance  with  the 
rules  laid  down  by the Member  States. 
On the other  hand,  as regards  the calculation  of the 
effective  annual  rate  of interest,  the Committee  con-
siders  that  a single  formula  for use at European  level 
based  on existing  commercial  practices  ought  to be 
sought  if at all possible.  The  Committee  queries  the 
compatibility  of this  objective  and  the Directive's 
leaving  it to the Member  States  to lay down  the rules 
for calculating  the effective  annual  rate.  It considers 
that clarity  must  be introduced  in this connection  at 
European  level  for the sake  of equality  of citizens  be-
fore European  law and for the sake  of obviating  dis-
tortions.  It is not for the Economic  and Social  Com-
mittee  but for experts  to select  an appropriate  formu-
la. The  Committee  holds  that  selecting  such  formula 
should  not delay  the adoption  of the proposal  for a 
Directive  by the Member  States. 
Accordingly,  the Committee  suggests  that  the choice 
of formula  should  be made  by the  Commission 
within  the same  time  scale  as the Member  States  have 
to adapt  their  law  in line  with  the Directive.  The 
Committee  proposes  that  the Member  States  should 
then have  two extra  years  before  they  have  to apply 
the Commission's  chosen  formula. 
2.3. Consumer  protection  on the making  of the agree-
ment 
2.3.1.  Consumer  information 
Advertising  (Article  3) 
The Committee  points  out that  the idea  behind  this 
Article  is that the public  should  not be misled  by the 
information  given  to it. This is why  indication  of the total  cost  and the effec-
tive annual  rate  of interest  is only  required  when 
costs  relating  to credit  or a percentage  are mentioned 
in the advertising. 
The Committee  points  out,  however,  that  it will  be 
impossible  to indicate  the total  cost  of the credit 
where  the duration  of the credit  is not known.  Ac-
cordingly,  it proposes  that  it should  still  be possible 
to provide  the consumer  with  as much  information  as 
possible  about  the cost  of the credit.  The  Committee 
considers  that  this Article  must  not have  the effect  of 
reducing  information  to the consumer. 
Display  of annual  rate  of interest  and  credit 
costs  (Article  5) 
The Committee  considers  that the provisions  relating 
to displaying  the annual  rate  of interest  and  credit 
costs  are liable  to entail  complications  for credit 
establishments.  In the Committee's  view,  this Article 
should  be aligned  on the more  restrictive  model  of 
Article  3 (advertising). 
Accordingly,  the Committee  considers  that  the an-
nual rate  of interest  and  other  costs  relating  to credit 
should  only  be required  to be displayed  in business 
premises  to which  the public  has access  when  rates  or 
costs  are actually  mentioned  in displays.  Where  such 
information  is displayed  it should  be fair  and com-
plete  vis-a-vis  consumers  and  other  creditors. 
Agreements  to be in writing  (Articles  6 and 7) 
Without  prejudice  to its views  concerning  credit 
cards  and advances  on current  account,  the Commit-
tee approves  the Commission's  proposal  that  credit 
agreements  be made  in writing.  The  Committee  con-
siders  that  written  contracts  are the most  effective 
means  of ensuring  the parties  are informed  of their 
respective  rights  and  obligations. 
However,  it is against  the written  agreement  only 
containing  the  'essential  contractual  conditions'. 
(Translator's  note:  the  translation  of 'clauses' 
(French)  by 'conditions'  is the Commission's.)  This 
could  be a source  of confusion  and distortions  which 
would  inevitably  prejudice  the consumer.  It therefore 
proposes  that  'essential'  be replaced  by 'all*. 
The Committee  also  points  to serious  omissions  in 
the list of particulars  having  to be included  in the 
contract,  e.g. date,  place,  names  and addresses  of the 
parties. 
It also  has comments  on the drafting. 
The words  'where  the property  in the goods  does  not 
pass immediately  to the consumer'  should  be added 
at the  beginning  of Article  6 (2) (a). The  terms 
No C 113/26 Official  Journal  of the European  Communities 7. 5. 80 
'details'  and 'indication'  in connection  with  security 
(Articles  6 (2) (a) (vii)  and 6 (2) (c) (iv))  are too vague, 
they should  be better  defined. 
Furthermore,  the Committee  points  out that  in the 
case of mail  order  sales  pursuant  to current  accounts 
Article  8 would  result  in a fresh  agreement  having  to 
be drawn  up in writing  each  time  a sale is made  after 
the opening  of the account.  This  would  cause  consid-
erable  difficulties  in practice. 
The Committee  points  out that  the issue  is above  all 
one of consumer  information.  The  question  of the 
physical  medium  for the information  is of less impor-
tance  as long  as the information  is actually  pro-
vided. 
It therefore  proposes  that  a special  paragraph  deal 
with mail  order,  stipulating  that  signature  of a sim-
plified  contract  on the opening  of the credit  will suf-
fice provided  that  detailed  information  about  all the 
credit  arrangements  is provided  in the catalogue  or in 
an equivalent  document. 
The particulars  to be set out in the catalogue  should 
be listed  by the proposal  for a Directive  and should, 
in all cases,  include  the cost  of the credit. 
As regards  the legal  consequences  laid  down  by the 
Directive  in the event  of non-observance  of the provi-
sions  relating  to the written  agreement,  the Commit-
tee considers  that,  in the case  of harmonization  of 
law, it is important  that  Directives  should  clearly  lay 
down  the objectives  of the harmonization.  The objec-
tives  cannot  be left  to the Member  States  as the 
present  wording  provides. 
The Committee  points  out that  it is for the Directive 
and not the Member  States  to determine  the objec-
tives  of the legislation.  It is then  for the Member 
States  to take  the necessary  legal  measures  in order  to 
attain  these  objectives. 
2.3.2.  Specific  measures  to protect  the consumer 
Canvassing  (Article  4) 
The Committee  points  out that  this Article  is merely 
an application  of Article  16, whereby  Member  States 
may apply  more  stringent  requirements  in general  to 
those  laid down  in the Directive.  The Committee  also 
considers  that  the aggressive  commercial  practice  of 
canvassing,  coupled  with  more  than  one type  of con-
sumer  credit,  can  be very  dangerous  for the con-
sumer. 
It therefore  proposes  that  the Directive  should  pro-
vide that  all canvassing  should  be forbidden  except 
where  the consumer  is given  a sufficiently  long  cool-
ing-off  period.  It considers  that  canvassing  in con-
nection  with  consumer  credit  should  not be subject  to an out-and-out  ban but that a cooling-off  period  is vi-
tal if purchases  made  in such  circumstances  are not to 
be rash. 
Ban on  bills  of exchange  and  promissory 
notes  (Article  12) 
The Committee  approves  of this  ban.  It considers 
that it is essential  in order  to avoid  the various  protec-
tive measures  laid down  in the Directive  being  made 
nugatory.  Commercial  instruments,  such  as bills  of 
exchange  and promissory  notes,  would  allow  the cre-
dit to be recovered  direct  from  the consumer  without 
his being  able  to avail  himself  of his rights  under  the 
initial  sale-of-goods  and credit  agreement. 
The Committee  stresses,  however,  that  the ban  ap-
plies  solely  to transactions  between  businessmen  and 
consumers  and  not to transactions  between  men  of 
business  alone,  which  would  be completely  absurd 
given  that  commercial  instruments'  function  is to fa: 
cilitate  business  transactions. 
2.4. Protection  of the consumer  on execution  of the 
agreement 
2.4.1.  Specific  measures 
Reservation  of ownership  (Article  9) 
The Committee  deplores  the loose  wording  of this 
Article.  First,  it points  out that it is incorrect  in law to 
provide  that  repossession  shall  result  in the contract 
being  automatically  voided  since  each  party's  obliga-
tions  have  not necessarily  been  carried  out at that 
time. 
Secondly,  it points  out that the Article  does  not stipu-
late that  repossession  should  be justified. 
It proposes  that the creditor  should  no longer  be en-
titled  to repossess  the goods  once  the consumer  has 
paid a quarter  of the credit. 
Early  payment  (Article  10) 
The Committee  points  out that  it proposes  the con-
cept of the 'rate  of charge'  or 'annual  percentage 
charge'.  This  would  allow  a breakdown  of all of the 
following:  rate of interest,  which  would  be reimburs-
able,  fixed  charges,  covering,  for instance,  the charge 
for opening  the file and insurance,  which  would  not 
be refundable,  and charges  pro rata  temporis  which 
could  be reimbursed. 
It considers  that  this  concept  is particularly  appro-
priate  in the event  of early  repayment  of credit.  It 
avoids  any confusion  about  refunding  other  credit 
charges'. 
7. 5. 80 Official  Journal  of the European  Communities No C 113/27 
It further  considers  that information  as to the refund-
able or non-refundable  character  of credit  charges 
ought  to be given  to the consumer  when  the contract 
is made  so as to make  sure  both  parties  are informed 
when  they  are at arms'  length. 
In addition,  the Committee  deplores  that  the propo-
sal for a Directive  makes  no provision  for a propor-
tional  refund  depending  on the agreement  — if ap-
propriate  as construed  by the court. 
It considers  that,  with  the exception  of fixed  charges, 
it is equitable  that  interest  and  the other  charges  be 
refunded  on a proportional  basis. 
The Committee  is against  this matter  being  left to the 
Member  States,  since  this entails  a risk  of technical 
barriers  to trade  being  created  and  to damage  being 
done  to the harmonization  of legislation. 
Interdependence  of the credit  agreement  and 
the agreement  for  the  supply  of the  relevant 
goods  or services  (Article  13) 
In cases  of cooperation  between  the creditor  and the 
supplier  of the relevant  goods  or services  which  are 
deemed  to be credit  agreements  in line with  the Com-
mittee's  earlier  remarks,  and provided  that  advances 
on current  account,  credit  cards  and  bank  loans 
granted  directly  to the buyer  without  the supplier  be-
ing in any  way  involved  are not covered,  the Com-
mittee  approves  the measures  laid down  in the Direc-
tive as regards  the credit  agreement  in the event  that 
the goods  or services  are not supplied  or do not con-
form  with  their  description. 
However,  the Committee  considers  that  the same 
principle  of interdependence  should  be operative  as 
regards  the contract  of sale  where  the consumer's  ap-
plication  for credit  is turned  down.  It considers  that 
in this  case  too the consumer  should  be able  to re-
cover  his money  from  the supplier. 
The Committee  observes  that in cases  such  as the two 
covered  by the Directive  the transactions  for the 
supply  of goods  or services,  on the one hand,  and for 
credit  to finance  the same,  on the other,  are the result 
of cooperation  between  the supplier  and the creditor in full knowledge  of the facts  albeit,  legally,  they  are 
two separate  transactions. 
As regards  joint  and  several  liability  of the creditor 
and the supplier  for any repayment  of sums  paid,  the 
Committee  considers  that recourse  should  be made  in 
the first  instance  against  the supplier  since  the cases 
covered  by the Directive  concern  the supply  of the 
goods/services. 
2.4.2.  Supervisory  machinery  (Article  14) 
The Committee  considers  that  the various  supervi-
sory measures  set out in the Directive  ought  to be cu-
mulative  rather  than  alternatives.  Firstly,  it considers 
that obtaining  official  authorization  and  inspection 
by an official  body  go hand  in hand,  since  inspection 
has to entail  withdrawal  of authorization  if the activi-
ties are not in conformity  with  the provisions  of the 
Directive.  Secondly,  it considers  that  the existence  of 
a body  responsible  for examining  complaints  from 
consumers  and consumer  organizations  is essential  if 
protection  measures  are to be respected  and  actually 
put into  practice.  In addition,  it considers  that  one 
authorization  should  suffice  in the case  of organiza-
tions  employing  agents.  The  Directive  should  speak 
clearly  on this  matter. 
Finally,  as regards  the banking  approval  which  esta-
blishments  satisfying  the definition  in Article  1 of the 
first Directive  on banking  must  obtain  in order  to get 
official  authorization  to exercise  their  activities  in the 
field of consumer  credit,  the Committee  points  out 
that this provision  will  create  difficulties  for Member 
States  where  certain  institutions  satisfy  Article  1 of 
the banking  Directive  but fail to obtain  banking  ap-
proval.  The  Committee  considers  that  a solution 
must  be found  to this  difficulty. 
2.5. Entry  into  force  (Article  17) 
The Committee  considers  that  the time  limit  for the 
entry  into  force  of the Directive  in the Member  States 
should  be extended  to 24 months.  It further  proposes 
that the ban  on bills  of exchange  be deferred  for 36 
months.  It considers  that  the Member  States  should 
have  all the time  necessary  to adapt  their  legisla-
tion. 
Done  at Brussels,  31 January  1980. 
The Chairman 
of the Economic  and  Social  Committee 
Raffaele  VANNI 
No C 113/28 Official  Journal  of the European  Communities 7. 5. 80 
ANNEX 
to the opinion  of the Economic  and  Social  Committee 
The following  amendments  were  defeated  during  the discussions: 
Point  1.5,  second  paragraph 
Amend  to read  as follows: 
'The Committee  considers  that  the right  to cancel  (cooling-off  period)  should  be included  in 
the draft  Directive  in the interest  of consumer  protection.  Reference  is made  to what  is said  on 
this subject  under  2.3.2  "Specific  measures  to protect  the consumer".' 
Voting 
For: 19, against:  52, abstentions:  12. 
Point  2.1.11.  Credit  cards  (Article  6 (2) (b)) 
Delete  third  paragraph. 
Reason 
Credit  cards  are not excluded  from  the scope  of the Directive.  Note  the restriction  on the exemp-
tion in Article  2 (1) (d) and  the information  stipulations  under  Article  6 (2) (b). It is true  that  the 
limitations  mentioned  in the preceding  paragraph  will  exclude  their  inclusion  in circumstances  al-
most  equivalent  to the issue  of a cheque  but there  still  remains  their  use for the purposes  of securing 
credit  repayable  by instalments  over  a period  exceeding  three  months. 
Voting 
For: 24, against:  43, abstentions:  20. 
Point  2.3.1,  'Advertising  (Article  3)', second  paragraph 
Delete  this  paragraph  ('This  is why  ... advertising')  and  replace  by the following: 
'This  is why  standardized  information  must  be given  on the conditions  attaching  to the cre-
dit.' 
Reasons 
The present  wording  does  not make  the position  clear.  If one  person  offering  credit  specifies  the 
costs  and  duration  while  another  uses  the effective  rate of interest,  the consumer  still  cannot  com-
pare  like  with  like.  If the intention  is to make  the terms  clear  to the consumer,  standardized  infor-
mation  must  be required. 
Voting 
For: 19, against:  41, abstentions:  17. 
Point  2.3.1,  'Display  of annual  rate  of interest  and  credit  costs  (Article  5)', second  paragraph 
Replace  the words  'the  annual  rate  of interest  and  other  costs  relating  to credit'  by the follow-
ing: 
the annual  cost,  expressed  as the rate  of charge  or annual  percentage  charge'. 
Reasons 
If the present  text  remains  unchanged  the Committee  will  be contradicting  itself  in this  opinion.  It 
is stated  on page  10 (paragraph  3, line  8) that  all costs  must  be included  in the calculation  of the 
7. 5. 80 Official  Journal  of the European  Communities No C 113/29 
effective  rate of interest.  Here  it is stated  that  the annual  rate  of interest  and  other  costs  relating  to 
credit  must  be specified. 
Voting 
For: 22, against:  25, abstentions:  25. 
Point  2.3.1,  'Agreements  to be in writing'  (Articles  6 and  7) 
Add to clause  2 (b) of Article  6: 
'for credit  agreements  in the form  of credit  cards  under  which  there  is a right  to a loan  repay-
able by at least  four  instalments'. 
Reason 
Where  the duration  of the credit  is less  than  three  months  the transaction  is exempt  under  the 
Directive  and  the  Directive  would  only  be significant  where  credit  is extended  over  a longer 
period. 
Voting 
For: 2, against:  50, abstentions:  19. 
Point  2.3.1,  'Agreements  to be in writing',  after  fifth  paragraph 
Add after  the fifth  paragraph: 
'There  should  be an additional  subparagraph  to Article  6 (2) (c) viz. "(VI)  the circumstances 
under  which  the annual  interest  rate  or effective  annual  rate  of interest  may  vary".' 
Reason 
Bankers  and  borrowers  must  envisage  the rise  and  fall  of current  lending  rates. 
Voting 
For: 4, against:  50, abstentions:  18. 
Point  2.3.2,  'Specific  measures  to protect  the consumer'. 
Add the following  after  the second  paragraph  dealing  with  canvassing: 
'Cooling-off  period 
The Committee  thinks  that  a cooling-off  period  with  the right  to cancel  could  make  a consider-
able contribution  to consumer  protection  not only  in the case  of canvassing  but also  in other 
forms  of sale.  In the Committee's  view,  the risk  of a credit  agreement  being  rashly  concluded 
also in cases  where  there  is no canvassing  has increased  and will  continue  to grow  partly  on ac-
count  of the new  forms  of credit  (e.g.  revolving  loans). 
Although  the Committee  is aware  that  introduction  of this measure  will  give  rise to a number 
of problems,  it considers  that,  in the light  of the above,  a right  to cancel  (cooling-off  period) 
should  be included  in the Directive  as a specific  protective  measure  in the case  of all forms  of 
consumer  credit.' 
Voting 
For: 19, against:  52, abstentions:  12. 
Point  2.4.1,  'Reservation  of ownership  (Article  9)' 
In the first  paragraph  the first  word  of the second  sentence  'First,'  should  be replaced  by the words 
In particular,'. 
No C 113/30 Official  Journal  of the European  Communities 7. 5. 80 
The two following  paragraphs  should  be replaced  by the following  new  text: 
'This  being  so, the adoption  by the Member  States  of measures  guaranteeing  that repossession 
will not unjustifiably  disadvantage  one of the parties  concerned  is likely  to raise  serious  diffi-
culties  and result  in a great  deal  of litigation  for several  years  to come.' 
Reasons 
The amendment  is self-explanatory. 
Voting 
For: 20, against:  27, abstentions:  21. 
Point  2.4.1  'Interdependence  of the credit  agreement  and the agreement  for the supply  of the rele-
vant goods  or services  (Article  13)' 
Delete  the four  paragraphs  and substitute: 
'The onerous  responsibility  which  this Article  imposes  on the creditor  must  deter  any financial 
institution  from  providing  credit  in such  circumstances.  While  the consumer  must  prove  the 
existence  of cooperation  by the agreement  which  is financed  by means  of a credit  agreement 
(Article  1 (3) (b)) there  would  inevitably  be a reservation  regarding  non-delivery  or failure  to 
meet  quality  and standards  by the supplier. 
It is unlikely  that any bank  or finance  house  would  accept  obligations  such  as envisaged  in the 
Article  and which  would  be tantamount  to a partnership  in a joint  venture  with  the supplier. 
The Article  has a proviso  that  the consumer  has rights  under  national  laws  and these  would 
still be enforceable  against  the supplier  but it is unreasonable  to anticipate  that banks  and sim-
ilar institutions  must  act as nursemaids  for consumers  in their  exercise  of freedom  of choice  in 
buying  and acceptance  of goods  or services. 
It is not clear  that the implementation  of Article  13 is mandatory  in credit  agreements  under 
the proposed  Directive  and Article  15 could  be interpreted  as having  such  an implication.  In 
such circumstances  the Section  could  foresee  a severe  contraction  in the credit  available  to 
consumers.' 
Voting 
For: 6, against:  42, abstentions:  29. 
The following  passages  in the Section  opinion  were  deleted  as a result  of amendments  being  carried 
during  the discussions: 
Point  2.1.1  (Article  1 (2) (a)) 
The Section  approves  the definition  of "consumer"  given  in the proposal  for a Directive.  The 
definition  not only  demarcates  the scope  of the Directive  inter  alia  by excluding  legal  persons 
and persons  acting  in a commercial  or professional  capacity  — it does  so subtly  by specifying 
that only  persons  acting  predominantly  in such  capacities  are excluded.  The  definition  thus 
provides  a guideline  for the courts  in borderline  cases  and will  enable  case  law on the key 
question  of the scope  of the Directive  to be standardized.  It will also  obviate  any undermining 
of the Directive.' 
Voting 
For: 56, against:  21, abstentions:  17. 
Point  2.1.10  (Articles  2 (1) (d) and 8): 
'The Section  considers  advances  on current  account  to be an important  form  of consumer 
credit  and holds  that  they  should  be covered  by the Directive.' 
7. 5. 80 Official  Journal  of the European  Communities No C 113/31 
Voting 
For: 33, against:  32, abstentions:  24. 
Point  2.1.10,  first  paragraph 
'Lastly,  it stresses  that  it is important  not to exempt  advances  on a current  account  for less than 
three  months'  duration  from  the requirements  of the Directive  since  numerous  loans  are for 
less than  10 weeks.' 
Voting 
For: 50, against:  24, abstentions:  6. 
Point  2.2,  first  paragraph 
The concept  of rate  of charge  or annual  percentage  charge  encompasses  the various  charges 
for credit  but does  not mix  them  up with  the rate  of interest,  which  is the return  on the money 
lent.  The  Section  considers  that  this  rate  of charge  can provide  the consumer  with  information 
which  approximates  more  closely  to the real  state  of affairs.' 
Voting 
For: 39, against:  34, abstentions:  9. 
The following  passages  in the Section  opinion  were  amended  as a result  of amendments  being 
carried  during  the discussions: 
Point  2.2,  second  paragraph 
.. ought  to be sought.  The  Section  .. 
Voting 
For: unanimous. 
Point  2.4.1,  'Interdependence  of the credit  agreement  and  the agreement  for the supply  of the 
relevant  goods  or services  (Article  13)',  third  paragraph,  last  sentence: 
'... are intrinsically  linked  in the consumer's  mind  ...' 
Voting 
For: unanimous. 
Point  2.5. 
'The  Section  considers  that  the time  limit  for the entry  into  force  of the Directive  in the Mem-
ber States  should  be extended  to 24 months.  It considers  that  the Member  States  should  have 
all the time  necessary  to adapt  their  legislation.' 
Voting 
For: unanimous.