A4-0010/97

Resolution on the Commission report on the operation of Directive 87/102/EEC for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit (COM(95)0117 - C4-0185/95)

The European Parliament,

- having regard to the Commission's report (COM(95)0117 - C4-0185/95),

- having regard to the motion for a resolution, pursuant to Rule 45(2) of the Rules of Procedure, by Mr Vitorino on the protection of citizens who take out loans (B4-0553/95) ((OJ C 189, 28.7.1990, p. 2 (in its latest version).)),

- having regard to the 1968 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters(1),

- having regard to the 1980 Rome Convention on the Law Applicable to Contractual Obligations ((OJ L 266, 9.10.1980, p. 1.)),

- having regard to the 1988 Lugano Convention ((OJ L 319, 25.11.1988, p. 9.)),

- having regard to the report of the Committee on Legal Affairs and Citizens' Rights and the opinion the Committee on the Environment, Public Health and Consumer Protection (A4-0010/97),

A. whereas the Commission report is of broad scope, since it covers not only implementation of the Directive but also foreseeable trends on the credit market,

B. whereas the credit market is rapidly expanding in the Union,

C. whereas, without prejudice to the concept generally accepted in the European corpus juris and solely for the purposes of consumer credit, a new concept of the citizen as consumer should be introduced with a view to extending consumer protection to legal persons such as small undertakings which, in the exercise of their contractual rights, find themselves in a position of objective imbalance comparable to that between small savers and lending institutions,

D. whereas the limits now imposed on and the costs incurred in cross-border transactions prevent citizens, as consumers, from benefiting from greater opportunities to choose and more competitive prices,

E. whereas there is a need to guarantee compliance with the rules of free competition in the internal market and whereas consumers must have the right to choose, and to change without incurring a penalty, between different products and suppliers,

F. whereas, given the current state of development of the internal market and the subsidiarity principle, the effectiveness of Community legislation and the role of the Community institutions should be considered,

G. whereas the effective exercise of freedom of choice and real diversification of supply will make efficient instruments of consumer information and education increasingly necessary, so as to enable consumers to play an active role,

H. whereas, furthermore, effective free competition in a European credit market will involve diversification of supply, proliferation of suppliers and better dissemination of services between suppliers operating and living in the various regions of the Union,

I. whereas in the transition to the single currency - particularly in the three or so years of the conversion phase - the principle of contractual continuity will be essential to safeguard the required stability of the financial markets; whereas the welcome prospect of a single currency will call for fuller discussion of the desirability of adopting new, uniform, Union-wide legislation applicable to the whole credit industry;

J. whereas Union responsibilities in the field of consumer credit are in parallel with and complement the policy pursued by the Member States, in order to protect the safety and economic interests of consumers; whereas, moreover, Community law on consumer credit has helped to encourage the adoption of national legislative measures; whereas the Community will need to take action for:

- the completion of the internal market;

- protecting the health, safety and economic interests of consumers;

- the provision of adequate information;

- a high level of protection (Article 129a of the EC Treaty),

K. whereas the articles establishing the four fundamental freedoms are today directly applicable; whereas, under the law as it now stands, the Community approach will help to attain a high level of consumer protection by means of measures adopted as part of completion of the internal market; whereas credit policy in the narrow sense is still a matter for the Member States, without prejudice to the obligation of complying with Community law,

L. whereas the rule laid down in Article 129a of the EC Treaty, in conjunction with Articles 2, 3, and 3b, entitles the Community to intervene by exercising general 'powers of guidance', specifically by charting the objectives to be attained, adopting measures providing for at least some degree of harmonization, and encouraging cooperation among the national authorities concerned,

M. whereas Article 100a of the EC Treaty is the appropriate legal basis for harmonization measures which have as their object the establishment and functioning of the internal market,

N. having regard to the powers conferred on the Community institutions under the third pillar,

1. Believes that the Union should employ every legal means provided by the Treaties in order to enable a European credit market to come into being;

2. Believes that the Union should while upholding the principle of subsidiarity pursue a legislative policy with a view to adopting general rules governing the European credit market in the medium term, laying down standards for expansion of the market without neglecting the need to protect consumers' interests, while also stimulating free competition;

3. Considers that the concept of 'consumer' and the 'field covered' by Directive 87/102/EEC should be carefully assessed:

4. Considers that consumers generally do not simply need more protective legislation, but rather legislation that will encourage them to play an active role, and protect their right freely to seek and receive the information that will enable them to act in conditions of contractual equality;

5. Opposes, however, - to prevent disadvantages for the consumer - the Commission proposal to extend the scope of the consumer credit directive to include loans for renovation and modernization work that are not secured by mortgage, since these could then no longer be offered on the (compared with consumer credit, more favourable) interest terms for mortgage loans, or the consumer would have to bear extra costs for the creation and registration of mortgages;

6. Takes the view that every opportunity for setting up national authorities or Ombudsmen of any kind should be looked into, and favours encouraging the maintenance and development of simple and efficient arbitration and court procedures to safeguard consumers' rights, taking into account the importance of cross-border legal disputes;

7. Voices its conviction that self-regulation systems could enable specific standards to be adopted but could not resolve all the existing problems;

8. Stresses that measures to standardize agreements on the basis of voluntary, flexible codes of conduct would be of use if, and only if, variety of supply and the possibility of choice available to the consumer were not adversely affected;

9. Considers that encouragement should be given to all the various means of creating a mutual obligation whereby every contracting party would have to provide accurate, complete, and truthful information;

10. Considers that all forms of advertising and promotion should be the subject of more detailed provisions on such aspects as the content, indication of the nature of the product, the requirement to include instructions, and limits and safeguards on advertising aimed at children, provided that such standards are not already included, or capable of being included, in other specific legal acts;

11. Considers that, in the case of loans for the purchase of consumer goods, debtors should be permitted to exercise the option of early payment, without incurring unwarranted and unnecessary administrative costs;

12. Believes that national rules on the recovery of goods in the event of non-performance of a contract and on the joint and several liability of the creditor and the supplier must be harmonized to the extent shown to be necessary and compatible with the principle of subsidiarity;

13. Considers that the entitlement to benefit from a specified cooling-off period when concluding credit agreements to finance consumer goods should be guaranteed under uniform arrangements and time periods throughout the Community ;

14. Points out that practices such as assignment of credit, the use of securities as collateral and insurance to cover remaining debt should respect the principles of freedom to enter into contract, privacy of contract and legal certainty;

15. Considers that Community measures should prevent phenomena such as indebtedness through consumer information and education; secondly, that credit institutions must be allowed the opportunity to obtain information about a customer's solvency, provided that the law on the right of privacy is respected;

16. Supports the Commission's intention to examine whether and to what extent there are problems in consumers' dealings with credit intermediaries; points out that account needs to be taken of factual differences in comparison with the first-time borrower when extending certain commitments laid down in Directive 87/102/EEC to guarantors and sureties; draws attention to the fact that credit advances in connection with the issue of a credit card are already, notwithstanding the present variety of definitions in this area described by the Commission report, covered by the scope of Directive 87/102/EEC under Article 1(2)(c);

17. Is of the opinion that Community rules should not be adopted to harmonize credit secured by mortgage, because mortgage credit is inseparably connected with security and application procedures, which differ greatly between Member States; European-level regulation of mortgage credit would mean approximating the security and application rules of the Member States at the same time, and hence ultimately EU- wide harmonization of the national civil law provisions;

18. Notes that the most effective way of tackling usury - a disease of a market dominated by the supply side - with any guarantee of success is, in addition to a fully operational market, better consumer information, education and protection and tighter control by the national authorities of the institutions and agencies supplying credit;

19. Underlines the importance of providing effective conciliation and pre- judicial procedures, in so far as these may play a vital role, especially in cross-border disputes, since they are supplementary and capable of preventing costly legal proceedings to establish jurisdiction;

20. Believes that developing and acting on all possible ways of limiting the costs to contracting parties clearly constitutes a priority;

21. Considers, finally, that the best means of protecting individuals is to establish a system guaranteeing freedom of choice under conditions of free competition;

22. Calls on the Commission to brief Parliament regularly on the findings of the different studies and research projects commissioned and to notify Parliament as soon as possible, without allowing this in any way to obstruct the preparation of legislative proposals, of its position on the views adopted in this House on legislative policy;

23. Instructs its President to forward this resolution to the Council and the Commission.