No C 80/4 Official Journal of the European Communities 27. 3. 79 
II 
(Preparatory Acts) 
COMMISSION 
Proposal for a Council Directive relating to the approximation of the laws, regulations 
and administrative provisions of the Member States concerning consumer credit 
(Submitted by the Commission to the Council on 27 February 1979) 
THE COUNCIL OF THE EUROPEAN 
COMMUNITIES, harmonious development of economic activities 
throughout the Community; 
Having regard to the Treaty establishing the 
European Economic Community, and in particular 
Article 100 thereof, 
Having regard to the proposal from the 
Commission, 
Having regard to the opinion of the European 
Parliament, 
Having regard to the opinion of the Economic and 
Social Committee, 
Whereas wide differences exist between the laws in 
force in the Member States of the European 
Economic Community in matters of consumer 
credit; 
Whereas these differences in the national legal 
provisions are liable to jeopardize the establishment 
of a system which ensures that competition between 
creditors is not distorted in the common market; 
Whereas these differences lead to disparities in the 
degree of consumer protection in the various 
Member States> limit the opportunities the consumer 
has to obtain credit in another Member State, affect 
the volume and the nature of the credit sought, and 
also the purchase of goods and services; 
Whereas, in consequence, these differences have an 
influence on the free movement of goods and 
services obtained on credit and thus hinder the Whereas the Preliminary Programme of the 
European Economic Community for a consumer 
protection and information policy (') provides inter 
alia that the consumer should be protected from 
unfair credit terms and that a harmonization of the 
general conditions governing consumer credit should 
be undertaken as a priority; whereas for the 
foregoing reasons the laws in force in Member States 
concerning consumer credit directly affect the 
functioning of the common market; 
Whereas in the European Community the demand 
for consumer credit in order to meet private needs 
has increased considerably in recent decades; 
whereas it continues to show this overall tendency; 
Whereas the type of credit taken out has changed 
over a period of time; whereas new forms have 
emerged and continue to develop; 
Whereas the consumer does not always receive 
sufficient information on the conditions and cost of 
credit and the nature of his obligations; whereas the 
terms of credit agreements are often disadvantageous 
to the consumer; 
Whereas better protection of consumers can be 
achieved by adopting certain minimum requirements 
for all forms of credit; whereas, nevertheless, specific 
rules governing overdrafts granted or accepted by 
banks and other finance institutions should be laid 
down; 
0) OJ No C 92, 25. 4. 1975, p. 1. 
17. 3. 79 Official Journal of the European Communities No C 80/5 
Whereas it may be necessary to fix different financial 
limits above or below which the provisions of this 
Directive shall not apply in light of their different 
economic effects in each Member State; whereas 
such financial limits have to be determined in 
accordance with a Community procedure; 
Whereas the provision of information on the cost of 
credit in advertising and at the business premises of 
the creditor or credit broker can make it easier for 
the consumer to compare different offers; whereas 
Member States should be permitted to completely 
prohibit the unsolicited canvassing of consumers for 
the purpose of offering personal credit; 
Whereas consumer protection is further improved if 
credit agreements are made in writing and contain 
certain particulars concerning the essential 
contractual conditions; 
Whereas, in the event of default in payments on the 
part of the consumer, the creditor should not be 
permitted to repossess goods supplied on credit 
where the consumer remains liable for payment; 
whereas provisions should be made for credit 
agreements to be deemed to be terminated where the 
creditor repossesses the goods; 
Whereas, in view of the considerable bearing which 
credit has on the consumer's economic and, in many 
cases, personal situation, he should be allowed to 
discharge his obligations before the due date; 
whereas the interest and other charges paid should 
then be refunded in accordance with the provisions 
adopted by the Member State; 
Whereas the assignment of rights arising from credit 
agreements should not be allowed to weaken the 
position of the consumer; 
Whereas the use of negotiable instruments in credit 
agreements with a consumer should be restricted; 
whereas cheques should be used only as a means of 
payment; 
Whereas, in the event of cooperation between a 
creditor and a supplier, they should be jointly and 
severally liable to the consumer for the payments 
made by him if the goods are not supplied or are not 
in accordance with the terms of the agreement; 
whereas liability should not also be imposed on the 
creditor in respect of damage caused by a defective 
item to other property of the consumer or of a third 
party; Whereas suitable measures to be chosen by the 
Member States should be adopted for supervising 
creditors; 
Whereas contractual clauses excluding the 
application of the provisions adopted pursuant to this 
Directive must not be permitted; 
Whereas the provisions of this Directive shall not 
prevent Member States from adopting other 
measures to protect consumers, with due regard for 
their obligations under the Treaty establishing the 
European Economic Community and in particular 
the rules on the free movement of goods, the 
freedom to provide services, and competition, 
HAS ADOPTED THIS DIRECTIVE: 
Article 1 
1. This Directive shall apply to credit agreements. 
2. For the purposes of this Directive: 
(a) 'consumer' means a natural person not acting 
predominantly in a commercial or professional 
capacity; 
(b) 'creditor' means a natural or legal person who 
grants credit in the course of his commercial 
activity or business, or a group of such persons; 
(c) 'credit agreement' means an agreement whereby 
a creditor grants a consumer credit in the form 
of deferred payment, a loan or a promise to 
grant a loan or other financial accommodation 
and under which the consumer repays the credit, 
including any interest and charges, in more than 
one instalment; 
(d) 'effective annual rate of interest' means the total 
cost of the credit expressed as an annual 
percentage of the amount of the credit granted, 
including interest and all other charges; the 
effective annual rate of interest shall be 
calculated in accordance with the rules laid 
down by the Member States. 
3. An agreement for the supply of goods or the 
provision of services concluded with a consumer 
(a) which is financed by means of a credit 
agreement between a supplier and a consumer, 
or 
(b) which is financed by means of a credit 
agreement between a creditor and a consumer, 
No C 80/6 Official Journal of the 
in so far as the creditor cooperates with the 
supplier in the performance of the agreement for 
the supply of goods or the provision of services, 
shall also be deemed to be a credit agreement within 
the meaning of paragraph 2. 
4. Member States shall adjust the provisions of 
this Directive in applying them to credit agreements 
between a broker and a consumer. 
Article 2 
1. This Directive shall not apply to: 
(a) credit agreements or agreements promising to 
grant credit intended primarily for the purpose 
of acquiring property rights in land or in an 
existing or projected building or intended for the 
purpose of renovating or improving a building; 
(b) hiring agreements; 
(c) agreements, in particular for the supply of goods 
or the provision of services, under which the 
consumer is granted a period not exceeding 
three months within which to pay the price 
stipulated in the agreement; 
(d) subject to the provisions of Article 8, credit in 
the form of advances on a current account 
granted or accepted by a credit institution or 
financial institution, other than credit cards; 
(e) amounts greater or less than particular sums to 
be fixed by the Commission for a Member State 
which so requests after consultation with that 
Member State. 
2. Where the provisions of paragraph 1 (e) above 
are applied, Member States concerned shall take 
steps to ensure that the provisions on consumer 
credit are not circumvented as a result of the way in 
which agreements are formulated, in particular by 
the device of distributing the amount of credit over 
several agreements. 
Article 3 
Without prejudice to the general rules on misleading 
and unfair advertising, any advertisement in which a 
person offers to conclude or arrange credit 
agreements, and in which costs relating to the credit 
are indicated, shall show the total cost. 
"Where a percentage is given, the effective annual 
rate of interest must also be indicated. European Communities 27. 3. 79 
Article 4 
Member States may prohibit unsolicited visits to a 
consumer at his home, at his place of work or 
elsewhere for the purpose of proposing to him the 
conclusion of a credit agreement. 
Article 5 
Any person offering to conclude or arrange credit 
agreements shall clearly display, at those of his 
business premises to which the public has access, the 
annual rate of interest and other costs relating to the 
credit which he grants or arranges, and/or a notice 
to the effect that the consumer may request an offer 
which shall be binding on such a person if he grants 
the credit. He shall in both cases give examples of 
the effective annual rate of interest in respect of 
given sums. 
Article 6 
1. Credit agreements shall be made in writing. All 
credit agreements shall be signed by both parties. 
The facsimile signature of the creditor shall suffice. 
The consumer shall receive a copy of the written 
agreement. 
2. The written agreement shall contain the 
essential contractual conditions and at least the 
following particulars: 
(a) for credit agreements for the supply of goods or 
the provision of services : 
(i) a description of the goods or services 
covered by the agreement; 
(ii) the cash price and the credit price where 
this differs from the cash price; 
(iii) the effective annual rate of interest; where 
the cash price and the credit price are 
different; 
(iv) the amount of the deposit (if any) and the 
due dates, the number and amount of the 
instalments; 
(v) the terms covering any rebate for early 
repayment; 
(vi) who owns the goods and the terms under 
which the consumer becomes the owner of 
the goods; 
(vii) details of the security required (if any); 
27. 3. 79 Official Journal of the European Communities No C 80/7 
(b) for credit agreements in the form of credit cards: 
(i) a means of identifying the credit card; 
(ii) the credit limit (if any); 
(iii) annual rate of interest (if any) and the 
amount of any charges; 
(iv) the terms of repayment; 
(c) for other credit agreements falling within the 
scope of this Directive: 
(i) the amount or limit of the credit or — in 
, the case of a promise to grant credit — the 
amount or limit of the credit proposed; 
(ii) the annual rate of interest and any other 
•charges; 
(iii) the effective annual rate of interest unless a 
promise of a loan is concerned, in which 
case that rate shall be specified at the date 
when the loan is taken up; 
(iv) and indication of the security required (if 
any); 
(v) the terms of repayment. 
Article 7 
The laws of each Member State shall lay down the 
legal consequences of failure to respect the 
provisions of Article 6. 
Article 8 
Notwithstanding the exclusion provided for in 
Article 2 (1) (d), the consumer shall be informed in 
writing in the case of credit in the form of an 
advance on a current account within the meaning of 
Article 2 (1) (d): 
(a) at the time the agreement is concluded, 
— of the credit limit (if any); 
— of the annual rate of interest and the charges 
applicable from the time the agreement is 
concluded and the conditions under which it 
may be amended; 
— of the procedure for terminating the 
agreement; 
(b) during the period of the contract credit 
agreement, of any change in the annual rate of 
interest or in the relevant charges at the time it 
occurs. Such information may be given in a bank 
statement if such statements are sent at intervals 
of one month or less; (c) when a tacitly accepted overdraft extends 
beyond a period of three months of the annual 
rate of interest and any relevant charges, and of 
any amendment thereto. 
Article 9 
1. A credit agreement shall be void from the time 
the creditor repossesses, either on the basis of a right 
of ownership or of any other right, the goods 
supplied under a credit agreement. 
2. Member States shall lay down rules to ensure 
that repossession of goods does not lead to 
unjustified disadvantages to any of the parties 
involved. 
Article 10 
The consumer shall be entitled to discharge his 
obligations under a credit agreement before the time 
fixed by the agreement; in this case, interest and 
other charges shall be refunded in accordance with 
the provisions adopted by the Member States. 
Article 11 
Where the creditor assigns to a third person his 
rights against the consumer under a credit 
agreement, the consumer shall be entitled to plead 
against the third party any defence — including 
set-off — which is or would have been available to 
him against the creditor before the assignment. 
Article 12 
In the operation of credit agreements: 
(a) bills of exchange, other than cheques, and 
promissory notes may not be used either as 
security or as a means of payment; 
(b) cheques may be used only as a means of 
payment. 
Article 13 
1. Where the consumer proves the existence of 
cooperation as referred to in Article 1 (3) (b), and 
where the goods are not supplied or the services are 
not provided, and where he is rrot responsible for 
such failure to supply the goods or services, he shall, 
provided he has the right under the laws of the 
No C 80/8 Official Journal of the European Communities 27.3.79 
Member State concerned to recover from the 
supplier payments made by him and to refuse further 
payment, enjoy the same right in relation to the 
creditor. 
2. The consumer shall have the same rights under 
the conditions specified in paragraph 1 where the 
goods supplied or services provided do not conform 
to the agreement. 
3. In the cases referred to in paragraphs 1 and 2, 
the supplier and creditor shall be jointly and 
severally liable to the consumer for any repayment of 
sums paid. 
4. This Article shall not prejudice any other rights 
of the consumer against the supplier or rights of the 
creditor against the supplier. 
Article 14 
1. Member States shall provide that: 
(a) persons offering to conclude or arrange credit 
agreements shall obtain official authorization; or 
(b) persons concluding or arranging credit 
agreements shall be subject to inspection of their 
activities by an official body; or 
(c) a body be set up to examine complaints from 
individual consumers concerning credit 
agreements entered into by or offered to them as 
well as to receive complaints from consumer 
organizations concerning credit agreements or 
credit conditions offered to consumers; 
(d) if persons referred to in paragraph (a) above 
satisfy the definition in Article 1 of the First 
Coordinating Directive on Banking Activities ('), 
they may not receive official authorization to 
exercise their activity before they have received 
banking authorization. Where banking authorization is withdrawn, 
official authorization to carry on their activities 
in the consumer credit field shall also be 
withdrawn. 
2. The body referred to in paragraph 1 (c) shall 
be empowered to examine the complaints it receives, 
to advise consumers on the legal protection to which 
they are entitled and to institute legal proceedings on 
their behalf where they do not wish to exercise their 
rights but are willing to let the body act for them. 
Article 15 
No contractual agreement shall derogate, to the 
disadvantage of the consumer, from the provisions 
adopted in application of this Directive. 
Article 16 
Member States may lay down or retain more 
stringent provisions to protect consumers consistent 
with their obligations under the Treaty. 
Article 17 
1. The Member States shall bring into force the 
measures necessary to comply with this Directive 
within 18 months of its notification and shall 
forthwith inform the Commission thereof. 
2. The Member States shall communicate to the 
Commission the texts of the main provisions of 
national law which they adopt in the field covered 
by this Directive. 
Article 18 
(') OJ No L 322, 17. 12. 1977 p. 30. This Directive is addressed to the Member States.