Common Position (EC) No 14/2007 of 20 September 2007 adopted by the Council, acting in accordance with the procedure referred to in Article 251 of the Treaty establishing the European Community, with a view to the adoption of a Directive of the European Parliament and of the Council on credit agreements for consumers and repealing Council Directive 87/102/EEC
Date: 2007-09-20
Institutions: Council of the European Union
Subjects: access to information, approximation of laws, consumer credit, consumer information, consumer protection, contract, redemption

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Official Journal of the European Union

C 270E/1

III

(Preparatory Acts)

COUNCIL

COMMON POSITION (EC) No 14/2007

adopted by the Council on 20 September 2007

with a view to adopting Directive 2007/…/EC of the European Parliament and of the Council of …
on credit agreements for consumers and repealing Council Directive 87/102/EEC

(2007/C 270 E/01)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

Having regard to the Treaty establishing the European Com-
munity, and in particular Article 95 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Economic and
Social Committee (1),

Acting in accordance with the procedure
Article 251 of the Treaty (2),

laid down in

Whereas:

(1)

(2)

Council Directive 87/102/EEC of 22 December 1986 for
the approximation of the laws, regulations and adminis-
the Member States concerning
trative provisions of
consumer credit (3) lays down rules at Community level
concerning consumer credit agreements.

the Commission presented a report on the
In 1995,
operation of Directive 87/102/EEC and undertook a
broad consultation of the interested parties. In 1997, the
Commission presented a summary report of reactions to
the 1995 report. A second report was produced in 1996
on the operation of Directive 87/102/EC.

(1) OJ C 234, 30.9.2003, p. 1.
(2) Opinion of the European Parliament of 20 April 2004 (OJ C 104 E,
30.4.2004, p. 233). Council Common Position of 20 September 2007
and position of the European Parliament of …

(3) OJ L 42, 12.2.1987, p. 48. Directive as last amended by Directive
98/7/EC of the European Parliament and the Council (OJ L 101,
1.4.1998, p. 17).

(3)

(4)

(5)

(6)

revealed substantial
Those reports and consultations
differences between the laws of
the various Member
States in the field of credit for natural persons in general
and consumer credit in particular. An analysis of the
national
laws transposing Directive 87/102/EEC shows
that Member States use a variety of consumer protection
in addition to Directive 87/102/EEC, on
mechanisms,
account of differences in the legal or economic situation
at national level.

The de facto and de jure situation resulting from those
national differences in some cases leads to distortions of
competition among creditors in the Community and
creates obstacles to the internal market where Member
States have adopted different mandatory provisions more
stringent
in Directive
87/102/EEC. It restricts consumers' ability to make direct
use of the gradually increasing availability of cross-border
credit. Those distortions and restrictions may in turn
have consequences in terms of the demand for goods
and services.

provided

those

than

for

In recent years the types of credit offered to and used by
consumers have evolved considerably. New credit instru-
ments have appeared, and their use continues to develop.
It is therefore necessary to amend existing provisions and
to extend their scope, where appropriate.

In accordance with the Treaty,
the internal market
comprises an area without internal frontiers in which the
free movement of goods and services and freedom of
establishment are ensured. The development of a more
transparent and efficient credit market within the area
without internal frontiers is vital in order to promote the
development of cross-border activities.

(7)

(8)

(9)

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In order to facilitate the emergence of a well-functioning
internal market in consumer credit,
it is necessary to
make provision for a harmonised Community framework
in a number of core areas. In view of the continuously
developing market in consumer credit and the increasing
mobility of European citizens,
forward-looking Com-
munity legislation which is able to adapt to future forms
of credit and which allows Member States the appropriate
degree of flexibility in their implementation should help
to establish a modern body of law on consumer credit.

or more than EUR 100 000. Furthermore, Member
States could also apply the provisions of this Directive to
linked credit which does not fall within the definition of
a linked credit agreement as contained in this Directive.
Thus, the provisions on linked credit agreements could
be applied to credit agreements that serve only partially
to finance a contract for the supply of goods or provision
of a service.

(11)

It is important that the market should offer a sufficient
degree of consumer protection to ensure consumer confi-
dence. Thus, it should be possible for the free movement
of credit offers to take place under optimum conditions
for both those who offer credit and those who require it,
with due regard to specific situations in the individual
Member States.

In the case of specific credit agreements to which only
some provisions of this Directive are applicable, Member
States should not be allowed to adopt national legislation
implementing
this Directive.
provisions
However, Member States should remain free to regulate,
in their national legislation, such types of credit agree-
ments as regards other aspects not harmonised by this
Directive.

other

of

Full harmonisation is necessary in order to ensure that all
consumers
in the Community enjoy a high and
equivalent level of protection of their interests and to
create a genuine internal market. Member States should
introduce
therefore not be allowed to maintain or
national provisions other than those laid down in this
Directive. However, such restriction should only apply
where there are provisions harmonised in this Directive.
Where no such harmonised provisions exist, Member
introduce
States should remain free to maintain or
national legislation. Accordingly, Member States may, for
instance, maintain or introduce national provisions on
joint and several
the seller or supplier of
services and the creditor. Another example of this possi-
bility for Member States could be the maintenance or
introduction of national provisions on the cancellation of
a contract for the sale of goods or supply of services if
the consumer exercises his right of withdrawal from the
credit agreement. In this respect Member States, in the
case of open-end credit agreements, should be allowed to
fix a minimum period needing to elapse between the
time when the creditor asks for reimbursement and the
day on which the credit has to be reimbursed.

liability of

(10)

the provisions of

The definitions contained in this Directive determine the
scope of harmonisation. The obligation on Member
States to implement
this Directive
should therefore be limited to its scope as determined by
this Directive should be
those definitions. However,
without prejudice to the application by Member States, in
accordance with Community law, of the provisions of
this Directive to areas not covered by its scope. A
Member State could thereby maintain or
introduce
legislation corresponding to the provisions of
national
this Directive or certain of its provisions on credit agree-
ments outside the scope of this Directive, for instance on
credit agreements involving amounts less than EUR 200

(12) Agreements for the provision on a continuing basis of
services or for the supply of goods of the same kind,
where the consumer pays for them for the duration of
instalments, may differ
their provision by means of
considerably, in terms of the interests of the contractual
parties involved, and the modalities and performance of
the transactions, from credit agreements covered by this
Directive. Therefore, it should be clarified that such agree-
ments are not regarded as credit agreements for the
purposes of
this Directive. Such types of agreement
include, for example, an insurance contract where the
insurance is paid for in monthly instalments.

(13)

(14)

(15)

Credit agreements covering the granting of credit secured
by real estate should be excluded from the scope of this
Directive. That type of credit is of a very specific nature.
Also, credit agreements the purpose of which is to
finance the acquisition or retention of property rights in
land or in an existing or projected building should be
this Directive. However,
excluded from the scope of
credit agreements should not be excluded from the scope
of this Directive only because their purpose is the renova-
tion or increase of value of an existing building.

The provisions of
this Directive apply irrespective of
whether the creditor is a legal person or a natural person.
the right of
However,
Member States to limit, in conformity with Community
law,
for consumers to legal
persons only or to certain legal persons.

this Directive does not affect

the provision of credit

Certain provisions of
this Directive should apply to
natural and legal persons (credit intermediaries) who, in
the course of their trade, business or profession, for a fee,
present or offer credit agreements to consumers, assist
consumers by undertaking preparatory work in respect
of credit agreements or conclude credit agreements with

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consumers on behalf of the creditor. Organisations which
allow their
identity to be used in promoting credit
products, such as credit cards, and which may also
recommend those products to their members should not
be regarded as credit intermediaries for the purposes of
this Directive.

This Directive regulates only certain obligations of credit
intermediaries in relation to consumers. Member States
should therefore remain free to maintain or introduce
intermedi-
additional obligations incumbent on credit
aries.

in

creditor,

practices

information by the

should be protected against unfair or
Consumers
in particular with respect to the
misleading practices,
disclosure of
in line
with Directive 2005/29/EC of the European Parliament
and of the Council of 11 May 2005 concerning unfair
the
commercial
business-to-consumer
internal market
(‘Unfair Commercial Practices Direc-
tive’) (1). However, this Directive should contain specific
provisions on advertising concerning credit agreements
as well as certain items of standard information to be
provided to consumers in order to enable them, in par-
ticular,
to compare different offers. Such information
should be given in a clear, concise and prominent way. In
addition, Member States should remain free to regulate
information requirements in their national law regarding
advertising which does not contain information on the
cost of the credit.

tively, taking into account the requirements of profes-
sional diligence.

(20)

Credit agreements in which a borrowing rate is periodi-
cally revised in line with changes occurring in a reference
rate referred to in the credit agreement should not be
regarded as credit agreements with a fixed borrowing
rate.

(21) Member States should remain free to maintain or intro-
duce national provisions prohibiting the creditor from
requiring the consumer,
in connection with the credit
agreement, to open a bank account or conclude an agree-
ment in respect of another ancillary service, or to pay the
expenses or fees for such bank accounts or other ancil-
In those Member States where such
lary services.
combined offers are allowed, consumers
should be
informed before the conclusion of the credit agreement
about any ancillary services which are compulsory in
order for the credit to be obtained in the first place or on
the terms and conditions marketed. The costs payable in
respect of those ancillary services should be included in
the total cost of the credit; alternatively, if the amount of
such costs cannot be determined in advance, consumers
should receive adequate information about the existence
of costs at a pre-contractual stage. The creditor must be
presumed to have knowledge of the costs of the ancillary
services which he offers to the consumer himself, or on
behalf of a third party, unless the price thereof depends
on the
the
characteristics or
consumer.

situation of

specific

(16)

(17)

(18)

In order to enable consumers to make their decisions in
full knowledge of the facts, they should receive adequate
information, prior to the conclusion of the credit agree-
ment, on the conditions and cost of the credit and on
their obligations. To ensure the fullest possible transpar-
ency and comparability of offers,
such information
should, in particular, include the annual percentage rate
of charge applicable to the credit, determined in the same
way throughout the Community. As the annual percen-
tage rate of charge can at this stage be indicated only
through an example, such example should be representa-
tive. Therefore, it should correspond, for instance, to the
average duration and total amount of credit granted for
the type of credit agreement under consideration and, if
applicable, to the goods purchased. When determining
the representative example, the frequency of certain types
of credit agreement in a specific market should also be
taken into account. As regards the borrowing rate, the
frequency of instalments and the capitalisation of interest,
creditors should use their conventional method of calcu-
lation for the consumer credit concerned.

(22)

(23)

(19)

the credit

to the consumer should
The total cost of
comprise all the costs,
including interest, commissions,
taxes, fees for credit intermediaries and any other fees
which the consumer has to pay in connection with the
for notarial costs. Creditors'
credit agreement, except
actual knowledge of the costs should be assessed objec-

(1) OJ L 149, 11.6.2005, p. 22.

it is
For specific types of credit agreements, however,
appropriate,
in order to ensure an adequate level of
consumer protection without placing an excessive burden
on creditors or, where applicable, credit intermediaries, to
restrict the pre-contractual information requirements of
this Directive, taking into account the specific character
of such types of agreements.

consumer needs

The
given comprehensive
to be
information before he concludes the credit agreement,
regardless of whether or not a credit intermediary is
involved in the marketing of the credit. Therefore,
in
information requirements
general,
the pre-contractual
should also apply to credit
intermediaries. However,
where suppliers of goods and services act as credit
it is not appro-
intermediaries in an ancillary capacity,
priate to burden them with the legal obligation to
provide the pre-contractual
information in accordance
with this Directive. Suppliers of goods and services may
credit
be deemed,
intermediaries in an ancillary capacity if their activity as
credit intermediaries is not the main purpose of their
trade, business or profession. In those cases, a sufficient
level of consumer protection is still achieved since the
creditor is responsible for ensuring that the consumer
receives the full pre-contractual information, either from
the intermediary, if the creditor and the intermediary so
agree, or in some other appropriate manner.

acting as

example,

to be

for

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Official Journal of the European Union

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(24)

The potentially binding character of the information to
be provided to the consumer prior to the conclusion of
the credit agreement and the period of
time during
which the creditor is to be bound by it may be regulated
by the Member States.

among creditors, it should be ensured that creditors have
access to private or public databases concerning consu-
mers in a Member State where they are not established
compared with
under non-discriminatory conditions
creditors in that Member State.

relationship,

education of,

taking into account

(25) Member States should take appropriate measures to
promote responsible practices during all phases of the
credit
the specific
their credit market. Those measures may
features of
include, for instance, the provision of information to, and
the
including warnings
consumers,
about the risks attaching to default on payment and to
over-indebtedness. In the expanding credit market, in par-
ticular, it is important that creditors should not engage in
irresponsible lending, and the Member States should be
allowed to determine the sanctions applicable in the
event of their doing so. Without prejudice to the credit
risk provisions of Directive 2006/48/EC of the European
Parliament and of the Council of 14 June 2006 relating
to the taking up and pursuit of the business of credit
institutions (1), creditors should bear the responsibility of
checking
the
consumer. To that end, they should be allowed to use
information provided by the consumer not only during
the preparation of the credit agreement in question, but
also during a long-standing commercial relationship. The
Member States' authorities could also give appropriate
to creditors. Consumers
instructions and guidelines
should also act with prudence and respect their contrac-
tual obligations.

creditworthiness

individually

the

of

(26) Despite the pre-contractual information to be provided,
the consumer may still need additional assistance in
order to decide which credit agreement, within the range
of products proposed,
is the most appropriate for his
needs and financial situation. Therefore, Member States
should ensure that creditors provide such assistance in
relation to the credit products which they offer to the
consumer. Where appropriate, the relevant pre-contrac-
tual information, as well as the essential characteristics of
the products proposed,
should be explained to the
consumer in a personalised manner so that the consumer
can understand the effects which they may have on his
economic situation. Where applicable, this duty to assist
the consumer should also apply to credit intermediaries.
Member States could determine when and to what extent
such explanations are to be given to the consumer,
taking into account the particular circumstances in which
the credit is offered, the consumer's need for assistance
and the nature of individual credit products.

(27)

To assess the credit status of a consumer, the creditor
should also consult relevant databases;
the legal and
actual circumstances may require that such consultations
vary in scope. To prevent any distortion of competition

(1) OJ L 177, 30.6.2006, p. 1. Directive as amended by Commission

Directive 2007/18/EC (OJ L 87, 28.3.2007, p. 9).

(28) Where a decision to reject an application for credit is
based on the consultation of a database, the creditor
should inform the consumer of this fact and of the parti-
culars of the database consulted. However, the creditor
should not be obliged to give such information when this
is prohibited by other Community legislation,
for
example legislation on money laundering or the finan-
cing of terrorism. Furthermore, such information should
not be given if this would be contrary to objectives of
public policy or public security, such as the prevention,
investigation, detection or prosecution of
criminal
offences.

(29)

regulate contract

This Directive does not
law issues
related to the validity of credit agreements. Therefore, in
that area, the Member States may maintain or introduce
national provisions which are in conformity with Com-
munity law. Member States may regulate the legal regime
governing the offer to conclude the credit agreement, in
particular when it is to be given and the period during
which it is to be binding on the creditor. If such an offer
is made at the same time as the pre-contractual informa-
tion provided for by this Directive is given, it should, like
any additional information the creditor may wish to give
to the consumer, be provided in a separate document
which may be annexed to the Standard European
Consumer Credit Information.

(30)

In order to enable the consumer to know his rights and
obligations under the credit agreement, it should contain
all necessary information in a clear and concise manner.

(31)

the consumer

In order to ensure full transparency, the consumer should
be provided with information concerning the borrowing
rate, both at a pre-contractual stage and when the credit
agreement is concluded. During the contractual relation-
should further be informed of
ship,
changes to the variable borrowing rate and changes to
the payments caused thereby. This is without prejudice to
provisions of national law not related to consumer infor-
mation which lay down conditions for, or prescribe the
consequences of, changes, other than changes concerning
payments, in borrowing rates and other economic condi-
tions governing the credit, for instance rules providing
that the creditor may change the borrowing rate only
where there is a valid reason for such change or that the
consumer may terminate the contract should there be a
change in the borrowing rate or in some other economic
condition concerning the credit.

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(32)

The contracting parties should have the right to effect a
standard termination of an open-end credit agreement. In
addition, if agreed in the credit agreement, the creditor
should have the right to suspend the consumer's right to
draw down on an open-end credit agreement for objec-
tively justified reasons. Such reasons may include, for
instance, suspicion of an unauthorised or fraudulent use
of
the
the credit or a significantly increased risk of
consumer being unable to fulfil his obligation to repay
the credit. This Directive does not affect national law in
the area of contract
the
contracting parties to terminate the credit agreement on
the basis of a breach of contract.

law regulating the rights of

(37)

(33)

In order to approximate the procedures for exercising the
it is necessary to
in similar areas,
right of withdrawal
make provision for a right of withdrawal without penalty
and with no obligation to provide justification, under
conditions similar to those provided for by Directive
2002/65/EC of
the
Council of 23 September 2002 concerning the distance
marketing of consumer financial services (1).

the European Parliament and of

(34) Where a consumer withdraws from a credit agreement in
connection with which he has received goods, in particu-
lar from a purchase in instalments or from a hiring or
leasing agreement providing
an obligation to
purchase, this Directive should be without prejudice to
any regulation by Member States of questions concerning
the return of the goods or any related questions.

for

(35)

In the case of linked credit agreements, a relationship of
interdependence exists between the purchase of goods or
services and the credit agreement concluded for that
purpose. Therefore, where the consumer exercises his
right of withdrawal in respect of the purchase agreement,
based on Community law, he should no longer be bound
by the linked credit agreement. This should not affect
national
law applicable to linked credit agreements in
cases where a purchase agreement has been voided or
where the consumer has exercised his right of withdrawal
based on national law. Nor should this affect the rights of
consumers granted by national provisions according to
which no commitment may be entered into between the
consumer and a supplier of goods or services, nor any
payment made between those persons, as long as the
consumer has not signed the credit agreement to finance
the purchase of the goods or services.

(36) Under certain conditions,

the consumer

should be
allowed to pursue remedies against the creditor in the
event of problems related to the purchase agreement.
However, Member States should determine to what extent
and under what conditions the consumer is required to
pursue his remedies against the supplier, in particular by
bringing an action against the latter, before being in a
position to pursue them against the creditor. This Direc-

(1) OJ L 271, 9.10.2002, p. 16. Directive as amended by Directive

2005/29/EC.

tive should not deprive consumers of their rights under
national provisions attaching joint and several liability to
the seller or supplier of services and to the creditor.

The consumer should have the right to discharge his obli-
gations before the date agreed in the credit agreement. In
the case of early repayment, either in part or in full, the
creditor should be entitled to compensation for the costs
directly linked to the early repayment,
taking into
account also any savings thereby made by the creditor.
However, in order to determine the method of calculating
the compensation, it is important to respect several prin-
ciples. The calculation of the compensation due to the
creditor should be transparent and comprehensible to
consumers already at the pre-contractual stage and in any
case during the performance of the credit agreement. In
the calculation method should be easy for
addition,
creditors
the
to apply, and supervisory control of
compensation by the responsible authorities should be
facilitated. Therefore, and due to the fact that consumer
credit is, given its duration and volume, not financed by
long-term funding mechanisms,
the
compensation should be fixed in terms of a flat-rate
amount. This approach reflects the special nature of
credits for consumers and should not prejudice the
possibly different approach in respect of other products
which are financed by long-term funding mechanisms,
such as fixed-rate mortgage loans.

the ceiling for

(38) Member States should have the right to provide that
compensation for early repayment may be claimed by the
creditor only on condition that the amount repaid over a
twelve-month period exceeds a threshold defined by
Member States. When fixing that threshold, which should
not exceed EUR 10 000, Member States should for
the average amount of
instance take into account
consumer credits in their market.

(39) Assignment of

the creditor's

rights under a credit
agreement should not have the effect of placing the
consumer in a less favourable position. The consumer
should also be properly informed when the credit agree-
ment is assigned to a third party. However, where the
initial creditor, in agreement with the assignee, continues
to service the credit vis-à-vis the consumer, the consumer
has no significant
the
assignment. Therefore, a requirement at EU level that the
consumer be informed of the assignment in such cases
would be excessive.

in being informed of

interest

(40) Member States should remain free to maintain or intro-
duce national rules providing for collective forms of
communication when this is necessary for purposes
relating to the effectiveness of complex transactions such
as securitisations or liquidation of assets that take place
in the compulsory administrative liquidation of banks.

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(41)

In order to promote the establishment and functioning
of the internal market and to ensure a high degree of
protection for consumers throughout the Community, it
is necessary to ensure the comparability of information
relating to annual percentage rates of charge throughout
the Community. Despite
the uniform mathematical
formula for its calculation, the annual percentage rate of
charge provided for in Directive 87/102/EEC is not yet
fully comparable throughout the Community. In indivi-
dual Member States different cost factors are taken into
account in the calculation thereof. This Directive should
therefore clearly and comprehensively define the total
cost of a credit to the consumer.

(42)

In order to ensure market transparency and stability, and
pending further harmonisation, Member States should
ensure that appropriate measures for the regulation or
supervision of creditors are in place.

(47)

(48)

In particular, the Commission should be empowered to
adopt additional assumptions for the calculation of the
annual percentage rate of charge. Since those measures
are of general scope and are designed to amend non-
essential elements of this Directive, they must be adopted
in accordance with the regulatory procedure with scru-
tiny provided for in Article 5a of Decision 1999/468/EC.

In accordance with paragraph 34 of the Interinstitutional
agreement on better law-making (2), Member States are
encouraged to draw up, for themselves and in the interest
of the Community, their own tables, illustrating, as far as
possible, the correlation between this Directive and the
transposition measures and to make them public.

(49) Accordingly, taking account of the number of amend-
ments that need to be made to Directive 87/102/EEC due
to the evolution of the consumer credit sector and in the
interests of
the clarity of Community legislation, that
Directive should be repealed and replaced by this
Directive,

(43)

(44)

rights

respects

fundamental

This Directive
and
observes the principles recognised in particular by the
Charter of Fundamental Rights of the European Union.
In particular, this Directive seeks to ensure full respect for
the rules on protection of personal data, the right to
property, non-discrimination, protection of
family and
life, and consumer protection pursuant to
professional
the European
the Charter of Fundamental Rights of
Union.

Since the objective of this Directive, namely the establish-
ment of common rules for certain aspects of the laws,
regulations and administrative provisions of the Member
States concerning consumer credit, cannot be sufficiently
achieved by the Member States and can therefore be
better achieved at Community level, the Community may
adopt measures in accordance with the principle of subsi-
diarity as set out in Article 5 of the Treaty. In accordance
with the principle of proportionality, set out
in that
Article, this Directive does not go beyond what is neces-
sary in order to achieve that objective.

HAVE ADOPTED THIS DIRECTIVE:

CHAPTER I

SUBJECT MATTER, SCOPE AND DEFINITIONS

Article 1

Subject matter

The purpose of this Directive is to harmonise certain aspects of
the
regulations and administrative procedures of
the laws,
Member States concerning agreements covering credit
for
consumers.

Article 2

Scope

(45) Member States should lay down rules on penalties applic-
able to infringements of the national provisions adopted
pursuant to this Directive and ensure that they are imple-
mented. While the choice of penalties remains within the
discretion of the Member States, the penalties provided
for should be effective, proportionate and dissuasive.

(46)

The measures necessary for the implementation of this
Directive should be adopted in accordance with Council
Decision 1999/468/EC of 28 June 1999 laying down the
procedures for
implementing powers
the exercise of
conferred on the Commission (1).

1.

2.

This Directive shall apply to credit agreements.

This Directive shall not apply to the following:

(a) credit agreements which are secured either by a mortgage or
by another comparable security commonly used in a
Member State on immovable property or secured by a right
related to immovable property;

(b) credit agreements the purpose of which is to acquire or
retain property rights in land or in an existing or projected
building;

(c) credit agreements involving a total amount of credit less

than EUR 200 or more than EUR 100 000;

(1) OJ L 184, 17.7.1999, p. 23. Decision as amended by Decision

2006/512/EC (OJ L 200, 22.7.2006, p. 11).

(2) OJ C 321, 31.12.2003, p. 1.

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(d) hiring or

leasing agreements where an obligation to
purchase the object of the agreement is not laid down either
by the agreement itself or by any separate agreement; such
an obligation shall be deemed to exist if it is so decided
unilaterally by the creditor;

(e) credit agreements in the form of an overdraft facility and

where the credit has to be repaid within one month;

(f) credit agreements where the credit is granted free of interest
and without any other charges and credit agreements under
the terms of which the credit has to be repaid within three
months and only insignificant charges are payable;

(g) credit agreements where the credit

is granted by an
employer to his employees as a secondary activity free of
interest or at annual percentage rates of charge lower than
those prevailing on the market and which are not offered to
the public generally;

(h) credit agreements which are concluded with investment
firms as defined in Article 4(1) of Directive 2004/39/EC of
the European Parliament and of the Council of 21 April
2004 on markets in financial instruments (1) or with credit
institutions as defined in Article 4 of Directive 2006/48/EC
for the purposes of allowing an investor to carry out a
transaction relating to one or more of the instruments listed
in Section C of Annex I to Directive 2004/39/EC, where the
investment firm or credit institution granting the credit is
involved in such transaction;

(i) credit agreements which are the outcome of a settlement
reached in court or before another statutory authority;

Article 10(1), points (a) to (g), (l), (p) and points (r) to (u) of
Article 10(2), Article 10(3), Articles 12, 15, 16(1), first sentence,
Article 17 and Articles 19 to 32 shall apply.

The information to be included in those credit agreements shall
also contain information concerning the charges applicable
from the time such credit agreements are concluded and,
if
applicable, the conditions under which those charges may be
changed.

In the case of credit agreements in the form of overrun-

4.
ning, only Articles 1 to 3, 18, 20 and 22 to 32 shall apply.

5. Member States may determine that only Articles 1 to 4, 6,
7 and 9, Article 10(1), points (a) to (h) and (l) of Article 10(2),
Article 10(3) and Articles 11, 13 and 16 to 32 shall apply to
credit agreements which are concluded by an organisation
which:

(a)

is established for the mutual benefit of its members;

(b) does not make profits

for any other person than its

members;

(c)

fulfils a social purpose required by domestic legislation;

(d) receives and manages the savings of, and provides sources

of credit to, its members only; and

(j) credit agreements which relate to the deferred payment, free

of charge, of an existing debt;

(e) provides credit on the basis of an annual percentage rate of
charge which is lower than that prevailing on the market or
subject to a ceiling laid down by national law,

(k) credit agreements upon the conclusion of which the
consumer is requested to deposit an item as security in the
creditor's
the
consumer is strictly limited to that pledged item;

safe-keeping and where the

liability of

(l) credit agreements which relate to loans granted to a
restricted public under a statutory provision with a general
interest purpose, and at
lower interest rates than those
prevailing on the market or free of interest or on other
terms which are more favourable to the consumer than
those prevailing on the market and at interest rates not
higher than those prevailing on the market.

3.
In the case of credit agreements in the form of an over-
draft facility and where the credit has to be repaid on demand
or within three months, only Articles 1 to 3, Article 4(1),
points (a) to (e) of Article 4(2), Article 4(4), Articles 6 to 9,

(1) OJ L 145, 30.4.2004, p. 1. Directive as amended by Directive

2006/31/EC (OJ L 114, 27.4.2006, p. 60).

and whose membership is restricted to persons residing or
employed in a particular location or employees and retired
employees of a particular employer, or to persons meeting other
qualifications laid down under national law as the basis for the
existence of a common bond between the members.

Member States may exempt from the application of this Direc-
tive credit agreements concluded by such an organisation where
the total value of all existing credit agreements entered into by
the organisation is insignificant in relation to the total value of
all existing credit agreements in the Member State in which the
organisation is based and the total value of all existing credit
agreements entered into by all
in the
Member State is less than 1 % of the total value of all existing
credit agreements entered into in that Member State.

such organisations

Member States shall each year review whether the conditions for
the application of any such exemption continue to exist and
shall take action to withdraw the exemption where they consider
that the conditions are no longer met.

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6. Member States may determine that only Articles 1 to 4, 6,
7, 9, Article 10(1), points (a) to (i), (l) and (q) of Article 10(2),
Article 10(3), Articles 11, 13, 16 and Articles 18 to 32 shall
apply to credit agreements which provide for arrangements to
be agreed by the creditor and the consumer in respect of
deferred payment or repayment methods, where the consumer
is already in default on the initial credit agreement and where:

pecuniary form or any other agreed form of
consideration:

financial

(i) presents or offers credit agreements to consumers; or

(a) such arrangements would be likely to avert the possibility of

legal proceedings concerning such default; and

(ii) assists consumers by undertaking preparatory work in
respect of credit agreements other than as referred to
in (i); or

(b) the consumer would not thereby be subject to terms less
favourable than those laid down in the initial credit
agreement.

(iii) concludes credit agreements with consumers on behalf

of the creditor;

However, if the credit agreement falls within the scope of para-
graph 3, only the provisions of that paragraph shall apply.

(g)

Article 3

Definitions

‘total cost of the credit to the consumer’ means all the
costs, including interest, commissions, taxes and any other
kind of fees which the consumer is required to pay in
connection with the credit agreement and which are known
to the creditor, except for notarial costs; costs in respect of
ancillary services relating to the credit agreement, in par-
ticular insurance premiums, are also included if, in addition,
the conclusion of a service contract is compulsory in order
to obtain the credit or to obtain it on the terms and condi-
tions marketed;

For the purpose of this Directive, the following definitions shall
apply:

(a)

(b)

(c)

(d)

(e)

(f)

‘consumer’ means a natural person who,
in transactions
covered by this Directive, is acting for purposes which are
outside his trade, business or profession;

‘creditor’ means a natural or legal person who grants or
promises to grant credit in the course of his trade, business
or profession;

‘credit agreement’ means an agreement whereby a creditor
grants or promises to grant to a consumer credit in the
form of a deferred payment, loan or other similar financial
accommodation, except for agreements for the provision
on a continuing basis of services or for the supply of goods
of
the same kind, where the consumer pays for such
services or goods for the duration of their provision by
means of instalments;

‘overdraft
facility’ means an explicit credit agreement
whereby a creditor makes available to a consumer funds
which exceed the current balance in the consumer's current
account;

‘overrunning’ means a tacitly accepted overdraft whereby a
creditor makes available to a consumer funds which exceed
the current balance in the consumer's current account or
the agreed overdraft facility;

‘credit intermediary’ means a natural or legal person who is
not acting as a creditor and who, in the course of his trade,
for a fee, which may take a
business or profession,

(h)

‘total amount payable by the consumer’ means the sum of
the total amount of the credit and the total cost of the
credit to the consumer;

(i)

(j)

(k)

‘annual percentage rate of charge’ means the total cost of
the credit to the consumer, expressed as an annual percen-
tage of the total amount of credit;

‘borrowing rate’ means the interest rate expressed as a fixed
or variable percentage applied on an annual basis to the
amount of credit drawn down;

the creditor and the
‘fixed borrowing rate’ means that
consumer agree in the credit agreement on one borrowing
rate for the entire duration of the credit agreement or on
several borrowing rates for partial periods using exclusively
a fixed specific percentage. If not all borrowing rates are
determined in the credit agreement, the borrowing rate
shall be deemed to be fixed only for the partial periods for
which the borrowing rates are determined exclusively by a
fixed specific percentage agreed on the conclusion of the
credit agreement;

(l)

‘total amount of credit’ means the ceiling or the total sums
made available under a credit agreement;

(m) ‘durable medium’ means any instrument which enables the
consumer to store information addressed personally to him
in a way accessible for future reference for a period of time
adequate for the purposes of the information and which
allows the unchanged reproduction of
the information
stored;

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(n)

‘linked credit agreement’ means a credit agreement where:

that contract shall also be stated in a clear, concise and promi-
nent way, together with the annual percentage rate of charge.

(i)

the credit in question serves exclusively to finance an
agreement for the supply of specific goods or the provi-
sion of a specific service; and

(ii) those two agreements form, from an objective point of
view, a commercial unit; a commercial unit shall be
deemed to exist where the supplier or service provider
himself finances the credit for the consumer or, if it is
financed by a third party, where the creditor uses the
services of the supplier or service provider in connec-
tion with the conclusion or preparation of the credit
agreement.

CHAPTER II

INFORMATION AND PRACTICES PRELIMINARY TO THE
CONCLUSION OF THE CREDIT AGREEMENT

Article 4

Standard information to be included in advertising

1.
Any advertising concerning credit agreements which indi-
cates an interest rate or any figures relating to the cost of the
include standard information in
credit to the consumer shall
accordance with this Article. This obligation shall not apply
where national legislation requires the indication of the annual
percentage rate of charge in advertising concerning credit agree-
ments which does not indicate an interest rate or any figures
relating to the cost of credit to the consumer.

The standard information shall specify,

2.
in the following
order, and in a clear, concise and prominent way by means of a
representative example:

(a)

the borrowing rate, fixed or variable or both, if applicable,
together with particulars of any applicable charges;

(b) the total amount of credit;

(c)

the annual percentage rate of charge; in the case of a credit
agreement of the kind referred to in Article 2(3), Member
States may decide that the annual percentage rate of charge
need not be provided;

(d) the duration of the credit agreement;

(e)

in the case of a credit in the form of deferred payment for a
specific good or service, the cash price and the amount of
any advance payment; and

This Article shall be without prejudice to Directive

4.
2005/29/EC.

Article 5

Pre-contractual information

1.
In good time before the consumer is bound by any credit
agreement or offer, the creditor and, where applicable, the credit
intermediary shall, on the basis of the credit terms and condi-
tions offered by the creditor and, if applicable, the preferences
expressed and information supplied by the consumer, provide
the consumer with the information needed to compare different
offers in order to take an informed decision on whether to
conclude a credit agreement. Such information, on paper or on
another durable medium, shall be provided by means of the
Standard European Consumer Credit Information form set out
in Annex II. The creditor shall be deemed to have fulfilled the
information requirements in this paragraph and in Article 3,
paragraphs (1) and (2) of Directive 2002/65/EC if he has
supplied the Standard European Consumer Credit Information.

The information in question shall specify:

(a)

the type of credit;

(b)

the identity and the geographical address of the creditor as
well as, if applicable, the identity and geographical address
of the credit intermediary involved;

(c)

the total amount of credit and the conditions governing the
drawdown;

(d)

the duration of the credit agreement;

(e)

(f)

in the case of a credit in the form of deferred payment for
a specific good or service and linked credit agreements, that
good or service and its cash price;

the borrowing rate, the conditions governing the applica-
tion of the borrowing rate and, where available, any index
or reference rate applicable to the initial borrowing rate, as
well as the periods, conditions and procedure for changing
the borrowing rate;
if different borrowing rates apply in
different circumstances, the above-mentioned information
on all the applicable rates;

(f)

if applicable, the total amount payable by the consumer and
the amount of the instalments.

(g)

3. Where the conclusion of a contract regarding an ancillary
service relating to the credit agreement, in particular insurance,
is compulsory in order to obtain the credit or to obtain it on
the terms and conditions marketed, and the cost of that service
cannot be determined in advance, the obligation to enter into

to calculate that

the annual percentage rate of charge and the total amount
payable by the consumer, illustrated by means of a repre-
sentative example mentioning all the assumptions used in
order
rate; where the consumer has
informed the creditor of one or more components of his
preferred credit, such as the duration of the credit agree-
ment and the total amount of credit, the creditor shall take
those components into account;

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(h)

the amount, number and frequency of payments to be
made by the consumer and, where appropriate, the order
in which payments will be allocated to different outstanding
the
balances charged at different borrowing rates
purposes of reimbursement;

for

(i) where applicable,

the charges for maintaining one or
several accounts recording both payment transactions and
drawdowns, unless the opening of an account is optional,
together with the charges for using a means of payment for
both payment
transactions and drawdowns, any other
charges deriving from the credit agreement and the condi-
tions under which those charges may be changed;

(j) where applicable, the existence of costs payable by the
the credit

to a notary on conclusion of

consumer
agreement;

(k)

the obligation,
if any, to enter into an ancillary service
contract relating to the credit agreement, in particular an
insurance policy, where the conclusion of such a contract is
compulsory in order to obtain the credit or to obtain it on
the terms and conditions marketed;

(l)

the interest rate applicable in the case of late payments and
the arrangements for its adjustment, and, where applicable,
any charges payable for default;

(m) a warning

regarding

the

consequences of missing

payments;

(n) where applicable, the sureties required;

(o)

the existence or absence of a right of withdrawal;

(p)

(q)

(r)

the right of early repayment, and, where applicable, infor-
mation concerning the creditor's right to compensation and
the way in which that compensation will be determined;

the consumer's right to be informed immediately and free
of charge, pursuant to Article 9(2), of the result of a data-
base consultation carried out for the purposes of assessing
his creditworthiness;

the consumer's right to be supplied, on request and free of
charge, with a copy of the draft credit agreement. This
provision shall not apply if the creditor is at the time of the
request unwilling to proceed to the conclusion of the credit
agreement with the consumer; and

(s)

if applicable, the period of time during which the creditor
is bound by the pre-contractual information.

Any additional information which the creditor may provide to
the consumer shall be given in a separate document which may
be annexed to the Standard European Consumer Credit Informa-
tion form.

However, in the case of voice telephony communications,
2.
as referred to in Article 3(3) of Directive 2002/65/EC,
the
description of the main characteristics of the financial service to
be provided pursuant to the second indent of Article 3(3)(b) of
that Directive shall
include at least the items referred to in
points (c), (d), (e), (f) and (h) of paragraph (1) of this Article,
together with the annual percentage rate of charge illustrated by

means of a representative example and the total amount payable
by the consumer.

3.
If the agreement has been concluded at the consumer's
request using a means of distance communication which does
not enable the information to be provided in accordance with
paragraph 1, in particular in the case referred to in paragraph 2,
the creditor shall provide the consumer with the full Standard
European Consumer Credit Information immediately after the
conclusion of the credit agreement.

Upon request, the consumer shall, in addition to receiving
4.
the Standard European Consumer Credit
Information, be
supplied free of charge with a copy of the draft credit agree-
ment. This provision shall not apply if the creditor is at the time
of the request unwilling to proceed to the conclusion of the
credit agreement with the consumer.

5.
In the case of a credit agreement under which payments
made by the consumer do not give rise to an immediate corre-
sponding amortisation of the total amount of credit, but are
used to constitute capital during periods and under conditions
laid down in the credit agreement or in an ancillary agreement,
information required under paragraph 1
the pre-contractual
shall
include a clear and concise statement that such credit
agreements do not provide for a guarantee of repayment of the
total amount of credit drawn down under the credit agreement,
unless such a guarantee is given.

6. Member States shall ensure that creditors and, where
applicable, credit intermediaries provide adequate explanations
to the consumer, in order to place 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 in accordance with paragraph 1, the essential charac-
teristics of the products proposed and the specific effects they
including the consequences of
may have on the consumer,
default in payment by the consumer. Member States may adapt
the manner by which and the extent to which such assistance is
given, as well as by whom it is given, to the particular circum-
stances of the situation in which the credit agreement is offered,
the person to whom it is offered and the type of credit offered.

Article 6

Pre-contractual information requirements for certain credit
agreements in the form of an overdraft facility and for
certain specific credit agreements

In good time before the consumer becomes bound by any
1.
credit agreement or offer concerning a credit agreement as
referred to in Article 2(3), (5) or (6), the creditor and, where
applicable, the credit intermediary shall, on the basis of the
credit
if
applicable, the preferences expressed and information supplied
by the consumer, provide the consumer with the information
needed to compare different offers in order to take an informed
decision on whether to conclude a credit agreement.

terms and conditions offered by the creditor and,

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The information in question shall specify:

(a)

the type of credit;

(b)

the identity and geographical address of the creditor as well
as, if applicable, the identity and geographical address of
the credit intermediary involved;

(c)

the total amount of credit;

(d)

the duration of the credit agreement;

(e)

(f)

in the case of a credit in the form of deferred payment for
a specific good or service, that good or service and its cash
price;

the borrowing rate; the conditions governing the applica-
tion of that rate, any index or reference rate applicable to
the initial borrowing rate, the charges applicable from the
time the credit agreement is concluded, and, where applic-
able, the conditions under which those charges may be
changed;

(g)

the annual percentage rate of charge, illustrated by means
of representative examples mentioning all the assumptions
used in order to calculate that rate;

(h)

the conditions and procedure for terminating the credit
agreement;

(i) where applicable, an indication that the consumer may be
requested to repay the amount of credit in full at any time;

(j)

(k)

(l)

the interest rate applicable in the case of late payments and
the arrangements for its adjustment, and, where applicable,
any charges payable for default;

the consumer's right to be informed immediately and free
of charge, pursuant to Article 9(2), of the result of a data-
base consultation carried out for the purposes of assessing
his creditworthiness;

the consumer's right to be supplied, on request and free of
charge, with a copy of the draft credit agreement. This
provision shall not apply if the creditor is at the time of the
request unwilling to proceed to the conclusion of the credit
agreement with the consumer;

(m) the conditions and procedure for repayments; and

(n)

if applicable, the period of time during which the creditor
is bound by the pre-contractual information.

Such information shall be provided on paper or on another
durable medium. It may be provided by means of the European
Consumer Credit Information form set out in Annex III. The
creditor shall be deemed to have fulfilled the information
requirements in this paragraph and in Article 3(1) and (2) of
Directive 2002/65/EC if he has
supplied the European
Consumer Credit Information.

2.
In the case of a credit agreement of the kind referred to in
Article 2(3), Member States may decide that the annual percen-
tage rate of charge need not be provided.

3.
In the case of a credit agreement as referred to in
Article 2(5) and (6), the information provided to the consumer

in accordance with paragraph 1 of
include:

this Article shall also

(a)

the amount, number and frequency of payments to be made
by the consumer and, where appropriate, the order in which
payments will be allocated to different outstanding balances
charged at different borrowing rates for the purposes of
reimbursement; and

(b) the right of early repayment, and, where applicable, informa-
tion concerning the creditor's right to compensation and the
way in which that compensation will be determined.

if

the credit agreement

However,
falls within the scope of
Article 2(3), only the provisions of paragraph 1 of this Article
shall apply.

4.
However, in the case of voice telephony communications
and where the consumer requests that the overdraft facility be
made available with immediate effect, the description of the
main characteristics of the financial service shall include at least
the items referred to in points (c), (f), (g) and (i) of paragraph 1.
In addition, in credit agreements of the kind referred to in para-
graph 3, the description of the main characteristics shall include
a specification of the duration of the credit agreement.

5.
Notwithstanding the exclusion provided for in point (e) of
Article 2(2), the Member States shall apply at least the require-
ments of the first sentence of paragraph 4 of this Article to
credit agreements in the form of an overdraft facility and where
the credit has to be repaid within one month.

6.
Upon request, the consumer shall, in addition to receiving
the information referred to in paragraphs 1 to 4, be supplied
the draft credit agreement
free of charge with a copy of
containing
information provided for by
Article 10 insofar as that Article is applicable. This provision
shall not apply if the creditor is at the time of the request
unwilling to proceed to the conclusion of the credit agreement
with the consumer.

contractual

the

If the agreement has been concluded at the consumer's
7.
request using a means of distance communication which does
not enable the information to be provided in accordance with
paragraphs 1 and 3, including in the cases referred to in para-
graph 4, the creditor shall immediately after the conclusion of
the credit agreement fulfil his obligations under paragraphs 1
and 3 by providing the contractual
information pursuant to
Article 10 insofar as that Article is applicable.

Article 7

Exemptions

from the

pre-contractual

information

requirements

Articles 5 and 6 shall not apply to suppliers of goods or services
acting as credit intermediaries in an ancillary capacity. This is
without prejudice to the creditor's obligation to ensure that the
consumer receives the pre-contractual information referred to in
those Articles.

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Article 8

The credit agreement shall specify in a clear and concise

2.
manner:

Obligation to assess the creditworthiness of the consumer

1.
Before the conclusion of the credit agreement, the creditor
shall assess the consumer's 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.

2.
If the parties agree to change the total amount of credit
after the conclusion of the credit agreement, the creditor shall
update the financial information at his disposal concerning the
consumer and assess the consumer's creditworthiness before any
significant increase in the total amount of credit.

CHAPTER III

DATABASE ACCESS

Article 9

Database access

1. Without prejudice
application of Directive
to the
95/46/EC of the European Parliament and of the Council of
24 October 1995 on the protection of individuals with regard
free
to the processing of personal data
movement of such data (1), each Member State shall in the case
of cross-border credit ensure access for creditors from other
Member States to databases used in that Member State for asses-
sing the creditworthiness of consumers. The conditions for
access shall be non-discriminatory.

and on the

If the credit application is rejected on the basis of consul-
2.
tation of a database, the creditor shall
inform the consumer
immediately and without charge of the result of such consulta-
tion and of the particulars of the database consulted, unless the
provision of such information is prohibited by other Com-
munity legislation or is contrary to objectives of public policy
or public security.

CHAPTER IV

INFORMATION

AND

RIGHTS
AGREEMENTS

CONCERNING

CREDIT

Article 10

Information to be included in credit agreements

Credit agreements shall be drawn up on paper or on

1.
another durable medium.

All the contracting parties shall receive a copy of the credit
agreement. This Article shall be without prejudice to any
national rules regarding the validity of the conclusion of credit
agreements which are in conformity with Community law.

(1) OJ L 281, 23.11.1995, p. 31. Directive as amended by Regulation (EC)

No 1882/2003 (OJ L 284, 31.10.2003, p. 1).

(a)

the type of credit;

(b)

the identities and geographical addresses of the contracting
if applicable, the identity and geogra-
parties as well as,
phical address of the credit intermediary involved;

(c)

the duration of the credit agreement;

(d)

the total amount of credit and the conditions governing the
drawdown;

(e)

(f)

(g)

in case of a credit in the form of deferred payment for a
specific good or service, that good or service and its cash
price;

the borrowing rate, the conditions governing the applica-
tion of that rate and, where available, any index or refer-
ence rate applicable to the initial borrowing rate, as well as
the periods, conditions and procedures for changing the
borrowing rate and, if different borrowing rates apply in
different circumstances, the above-mentioned information
in respect of all the applicable rates;

the annual percentage rate of charge and the total amount
payable by the consumer, calculated at the time the credit
agreement is concluded; all the assumptions used in order
to calculate that rate shall be mentioned; in the case of a
credit agreement of the kind referred to in Article 2(3),
Member States may decide that the annual percentage rate
of charge need not be provided;

(h)

the amount, number and frequency of payments to be
made by the consumer and, where appropriate, the order
in which payments will be allocated to different outstanding
balances charged at different borrowing rates
the
purposes of reimbursement;

for

(i) where capital amortisation of a credit agreement with a
fixed duration is involved, a statement of account in the
form of an amortisation table indicating the payments
owing and the periods and conditions relating to the
payment of such amounts; the table shall contain a break-
down of each repayment showing capital amortisation, the
interest calculated on the basis of the borrowing rate and,
where applicable, any additional costs; where the interest
rate is not fixed or the additional costs may be changed
under the credit agreement, the amortisation table shall
indicate, clearly and concisely, that the data contained in
the table will remain valid only until such time as the
borrowing rate or the additional costs are changed in
accordance with the credit agreement;

(j)

if charges and interest are to be paid without capital amor-
tisation, a statement showing the periods and conditions
for the payment of the interest and of any associated recur-
rent and non-recurrent charges;

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(k) where applicable,

the charges for maintaining one or
several accounts recording both payment transactions and
drawdowns, unless the opening of an account is optional,
together with the charges for using a means of payment for
both payment transactions and drawdowns, and any other
charges deriving from the credit agreement and the condi-
tions under which those charges may be changed;

(l)

the interest rate applicable in the case of late payments as
applicable at the time of the conclusion of the credit agree-
ment and the arrangements for its adjustment and, where
applicable, any charges payable for default;

(m) a warning

regarding

the

consequences of missing

payments;

(n)

the sureties and insurance required, if any;

(o)

(p)

(q)

the existence or absence of a right of withdrawal,
the
period during which that right may be exercised and other
conditions governing the exercise thereof, including infor-
mation concerning the obligation of the consumer to pay
the capital drawn down and the interest in accordance with
Article 14(2)(b) and the amount of interest payable per day;

information concerning the rights resulting from Article 15
as well as the conditions for the exercise of those rights;

the right of early repayment, the procedure for early repay-
ment, as well as, where applicable, information concerning
the creditor's right to compensation and the way in which
that compensation will be determined;

medium, before the change enters into force. The information
shall state the amount of the payments to be made after the
entry into force of the new borrowing rate and, if the number
or frequency of the payments changes, particulars thereof.

2.
However, the parties may agree in the credit agreement
that the information referred to in paragraph 1 is to be given to
the consumer periodically in cases where the change in the
borrowing rate is caused by a change in a reference rate, the
new reference rate is made publicly available by appropriate
means and the information concerning the new reference rate is
also kept available in the premises of the creditor.

Article 12

Credit agreement in the form of an overdraft facility

1. Where a credit agreement covers credit in the form of an
overdraft facility, the consumer shall be kept regularly informed
by means of a statement of account, on paper or on another
durable medium, containing the following particulars:

(a)

the precise period to which the statement of account relates;

(b) the amounts and dates of drawdowns;

(c)

the balance from the previous statement, and the date
thereof;

(d) the new balance;

(r)

the procedure to be followed in exercising the right of
termination of the credit agreement;

(e)

the dates and amounts of payments made by the consumer;

(s) whether or not there is an out-of-court complaint and
the

the consumer and,

so,

if

redress mechanism for
methods for having access to it;

(t) where applicable, other contractual terms and conditions;

(u) where applicable, the name and address of the competent

supervisory authority.

3.
In the case of a credit agreement under which payments
made by the consumer do not give rise to an immediate corre-
sponding amortisation of the total amount of credit, but are
used to constitute capital during periods and under conditions
laid down in the credit agreement or in an ancillary agreement,
the information required under paragraph 2 shall include a clear
and concise statement
that such credit agreements do not
provide for a guarantee of repayment of the total amount of
credit drawn down under the credit agreement, unless such a
guarantee is given.

(f)

the borrowing rate applied;

(g) any charges that have been applied;

(h) where applicable, the minimum amount to be paid.

2.
In addition, the consumer shall be informed on paper or
another durable medium of increases in the borrowing rate, or
in any charges payable, before the change in question enters
into force.

However, the parties may agree in the credit agreement that
information concerning changes in the borrowing rate is to be
given in the manner provided for in paragraph 1 in cases where
the change in the borrowing rate is caused by a change in a
reference rate, the new reference rate is made publicly available
by appropriate means and the information concerning the new
reference rate is also kept available in the premises of
the
creditor.

Article 11

Information concerning the borrowing rate

1. Where applicable, the consumer shall be informed of any
change in the borrowing rate, on paper or another durable

Article 13

Open-end credit agreements

The consumer may effect standard termination of an
1.
open-end credit agreement free of charge at any time unless the
parties have agreed on a period of notice. Such a period may
not exceed one month.

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If agreed in the credit agreement, the creditor may effect stand-
ard termination of an open-end credit agreement by giving the
consumer at least two months' notice drawn up on paper or on
another durable medium.

2.
If agreed in the credit agreement, the creditor may for
objectively justified reasons terminate the consumer's right to
draw down on an open-end credit agreement. The creditor shall
inform the consumer of the termination and the reasons for it
on paper or on another durable medium, where possible before
the termination and at the latest immediately thereafter, unless
the provision of such information is prohibited by other Com-
munity legislation or is contrary to objectives of public policy
or public security.

Article 14

Right of withdrawal

3.
If an ancillary service relating to the credit agreement is
provided by the creditor or by a third party on the basis of an
agreement between the third party and the creditor,
the
consumer shall no longer be bound by the ancillary service
contract if the consumer exercises his right of withdrawal from
the credit agreement in accordance with this Article.

If the consumer has a right of withdrawal under para-
4.
graphs 1 to 3, Articles 6 and 7 of Directive 2002/65/EC and
Article 5 of Council Directive 85/577/EEC of 20 December 1985
to protect the consumer in respect of contracts negotiated away
from business premises (1) shall not apply.

5. Member States may provide that paragraphs 1 to 3 of this
Article shall not apply to credit agreements which by law are
required to be concluded through the services of a notary,
provided that the notary confirms that the consumer is guaran-
teed the rights provided for under Articles 5 and 10.

This Article shall be without prejudice to any rule of
law establishing a period of time during which the

6.
national
performance of the contract may not begin.

1.
The consumer shall have a period of fourteen calendar
days in which to withdraw from the credit agreement without
giving any reason.

Article 15

Linked credit agreements

That period of withdrawal shall begin:

(a) either from the day of the conclusion of the credit agree-

ment; or

(b) from the day on which the consumer receives the contrac-
tual terms and conditions and information in accordance
with Article 10, if that day is later than the date referred to
in point (a) of this subparagraph.

2.

If the consumer exercises his right of withdrawal, he shall:

(a)

in order to give effect to the withdrawal before the expiry of
the deadline referred to in paragraph 1, notify this to the
creditor in line with the information given by the creditor
pursuant to point (o) of Article 10(2) by means which can
be proven in accordance with national
law. The deadline
shall be deemed to have been met if that notification, if it is
on paper or on another durable medium that is available
and accessible to the creditor, is dispatched before the dead-
line expires; and

(b) pay to the creditor the capital and the interest accrued
thereon from the date the credit was drawn down until the
date the capital is repaid, without any undue delay and no
later than 30 calendar days after the despatch by him to the
creditor of notification of the withdrawal. The interest shall
be calculated on the basis of the agreed borrowing rate. The
creditor shall not be entitled to any other compensation
from the consumer in the event of withdrawal, except
compensation for any non-returnable charges paid by the
creditor to any public administrative body.

1. Where the consumer has exercised a right of withdrawal,
based on Community law, concerning a contract for the supply
of goods or services, he shall no longer be bound by a linked
credit agreement.

2. Where the goods or services covered by a linked credit
agreement are not supplied, or are supplied only in part, or are
not in conformity with the contract for the supply thereof, the
consumer shall have the right to pursue remedies against the
creditor if the consumer has pursued his remedies against the
supplier but has failed to obtain the satisfaction to which he is
entitled according to the law or the contract for the supply of
goods or services. Member States shall determine to what extent
and under what conditions those remedies shall be exercisable.

3.
This Article shall be without prejudice to any national
rules rendering the creditor jointly and severally liable in respect
of any claim which the consumer may have against the supplier
where the purchase of goods or services from the supplier has
been financed by a credit agreement.

Article 16

Early repayment

1.
The consumer shall be entitled at any time to discharge
fully or partially his obligations under a credit agreement. In
such cases, he shall be entitled to a reduction in the total cost of
the credit, such reduction consisting of the interest and the
costs for the remaining duration of the contract.

(1) OJ L 372, 31.12.1985, p. 31.

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2.
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 and the creditor proves that the reference
interest rate applied by the European Central Bank to its most
recent main refinancing operation carried out before the first
calendar day of the half year in question is lower at the time of
the early repayment than at the time of conclusion of the credit
agreement. For a Member State which is not participating in the
third stage of economic and monetary union, the reference rate
shall be the equivalent rate set by its national central bank.

Such compensation shall be determined by the creditor and may
not exceed 1 % of the amount of credit repaid early,
if the
period of time between the early repayment and the agreed
termination of the credit agreement exceeds one year. If the
period does not exceed one year, the compensation may not
exceed 0,5 % of the amount of credit repaid early.

The compensation shall not exceed the amount of interest the
consumer would have paid during the period between the early
repayment and the agreed date of termination of the credit
agreement.

3.

Compensation for early repayment shall not be claimed:

(a)

if the repayment has been made under an insurance contract
intended to provide a credit repayment guarantee;

(b) in the case of overdraft facilities; or

(c)

the repayment

if
borrowing rate is not fixed.

falls within a period for which the

4. Member States may provide that such compensation may
be claimed by the creditor only on condition that the amount
of the early repayment exceeds the threshold defined by national
law. That threshold shall not exceed EUR 10 000 within any
period of twelve months.

Article 17

Assignment of rights

1.
In the event of assignment to a third party of the creditor's
rights under a credit agreement or the agreement itself, the
consumer shall be entitled to plead against the assignee any
defence which was available to him against the original creditor,
including set-off where the latter is permitted in the Member
State concerned.

The consumer shall be informed of the assignment referred
2.
to in paragraph 1 except where the original creditor, by agree-
ment with the assignee, continues to service the credit vis-à-vis
the consumer.

Article 18

Overrunning

1.
In the case of an agreement to open a current account,
where there is a possibility that the consumer is allowed an
overrun, the agreement shall contain in addition the informa-
tion referred to in point (f) of Article 6(1). The creditor shall in
any case provide that information on paper or another durable
medium on a regular basis.

2.
In the event of a significant overrunning exceeding a
period of one month, the creditor shall inform the consumer
without delay, on paper or on another durable medium,

(a) of the overrunning;

(b) of the amount involved;

(c) of the borrowing rate;

(d) of any penalties, charges or interest on arrears applicable.

3.
This Article shall be without prejudice to any rule of
law requiring the creditor to offer another kind of
national
credit product when the duration of the overrunning is signifi-
cant.

CHAPTER V

ANNUAL PERCENTAGE RATE OF CHARGE

Article 19

Calculation of the annual percentage rate of charge

1.
The annual percentage rate of charge, equating, on an
annual basis, to the present value of all commitments (draw-
downs, repayments and charges), future or existing, agreed by
the creditor and the consumer, shall be calculated in accordance
with the mathematical formula set out in Part I of Annex I.

For the purpose of calculating the annual percentage rate
2.
of charge, the total cost of the credit to the consumer shall be
determined, with the exception of any charges payable by the
consumer for non-compliance with any of his commitments
laid down in the credit agreement and charges other than the
purchase price which, for purchases of goods or services, he is
obliged to pay whether the transaction is effected in cash or on
credit.

The costs of maintaining an account recording both payment
transactions and drawdowns, the costs of using a means of
payment for both payment transactions and drawdowns, and
other costs relating to payment transactions shall be included in
the total cost of credit to the consumer unless the opening of
the account is optional and the costs of the account have been
clearly and separately shown in the credit agreement or in any
other agreement concluded with the consumer.

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3.
The calculation of the annual percentage rate of charge
shall be based on the assumption that the credit agreement is to
remain valid for the period agreed and that the creditor and the
consumer will fulfil their obligations under the terms and by
the dates specified in the credit agreement.

4.
In the case of credit agreements containing clauses
allowing variations in the borrowing rate and, where applicable,
charges contained in the annual percentage rate of charge but
unquantifiable at the time of calculation, the annual percentage
rate of charge shall be calculated on the assumption that the
borrowing rate and other charges will remain fixed in relation
to the initial level and will remain applicable until the end of
the credit agreement.

5. Where necessary, the additional assumptions set out in
Annex I may be used in calculating the annual percentage rate
of charge.

If the assumptions set out in this Article and in Part II of
Annex I do not suffice to calculate the annual percentage rate of
charge in a uniform manner, the Commission may determine
the necessary additional assumptions for the calculation of the
annual percentage rate of charge. These measures, designed to
amend non-essential elements of this Directive, shall be adopted
in accordance with the regulatory procedure with scrutiny
referred to in Article 25(2).

CHAPTER VI

CREDITORS AND CREDIT INTERMEDIARIES

Article 20

Regulation of creditors

Member States shall ensure that creditors are supervised by a
institutions, or
body or authority independent from financial
regulated. This
to Directive
shall be without prejudice
2006/48/EC.

Article 21

(iii) the credit agreement in respect of which he has acted is

actually concluded;

(iv) the credit intermediary communicates the amount of
the fee to the creditor for the purpose of calculation of
the annual percentage rate of charge.

CHAPTER VII

IMPLEMENTING MEASURES

Article 22

Harmonisation and imperative nature of this Directive

Insofar as this Directive contains harmonised provisions,
1.
Member States may not maintain or introduce in their national
law provisions diverging from those laid down in this Directive.

2. Member States shall ensure that consumers may not waive
the rights conferred on them by the provisions of national law
implementing or corresponding to this Directive.

in implementation of

3. Member States shall
further ensure that the provisions
this Directive cannot be
they adopt
circumvented as a result of the way in which agreements are
formulated,
in particular by integrating drawdowns or credit
agreements falling within the scope of this Directive into credit
agreements the character or purpose of which would make it
possible to avoid its application.

4. Member States shall take the necessary measures to ensure
that consumers do not lose the protection granted by this Direc-
tive by virtue of the choice of the law of a third country as the
law applicable to the credit agreement, if the credit agreement
has a close link with the territory of one or more Member
States.

Article 23

Penalties

Certain obligations of

intermediaries

credit
consumers

Member States shall ensure that a credit intermediary:

vis-à-vis

Member States shall lay down the rules on penalties applicable
to infringements of the national provisions adopted pursuant to
this Directive and shall take all measures necessary to ensure
that they are implemented. The penalties provided for must be
effective, proportionate and dissuasive.

(a)

indicates in advertising and documentation intended for
consumers the extent of his powers, in particular whether
he works exclusively with one or more creditors or as an
independent broker;

(b) does not

receive any fee from a consumer who has
requested his services, unless all the following conditions are
met:

(i)

the amount of the fee is agreed between the consumer
and the credit
intermediary on paper or another
durable medium;

(ii)

the credit intermediary does not receive a fee from the
creditor;

Article 24

Out-of-court dispute resolution

1. Member States shall ensure that adequate and effective
out-of-court dispute resolution procedures for the settlement of
consumer disputes concerning credit agreements are put
in
place, using existing bodies where appropriate.

2. Member States shall encourage those bodies to cooperate
in order to also resolve cross-border disputes concerning credit
agreements.

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Article 25

Committee procedure

1.

The Commission shall be assisted by a Committee.

2. Where reference is made to this paragraph, Article 5a(1)
to (4) and Article 7 of Decision 1999/468/EC shall apply,
having regard to the provisions of Article 8 thereof.

Article 26

Article 28

Conversion of amounts expressed in euro into national
currency

1.
For the purposes of this Directive, those Member States
who convert the amounts expressed in euro into their national
currency shall initially use in the conversion the exchange rate
prevailing on the date of adoption of this Directive.

2. Member States may round off the amounts resulting from
the conversion provided that such rounding off does not exceed
EUR 10.

Information to be supplied to the Commission

CHAPTER VIII

TRANSITIONAL AND FINAL PROVISIONS

Article 29

Repeal

Directive 87/102/EEC shall be repealed with effect from … (*).

Article 30

Transitional measures

This Directive shall not apply to credit agreements existing
implementing measures enter

1.
on the date when the national
into force.

However, Member States shall ensure that Articles 11, 12,
2.
13 and 17,
the second sentence of Article 18(1), and
Article 18(2) are applied also to open-end credit agreements
existing on the date when the national implementing measures
enter into force.

Article 31

Entry into force

This Directive shall enter
following that of its publication in the Official
European Union.

into force on the twentieth day
Journal of the

Article 32

Addressees

This Directive is addressed to the Member States.

Done at …,

For the European Parliament

The President

…

For the Council

The President

…

of

use

any of

a Member

State makes

the
Where
regulatory choices
referred to in Article 2(5) and 2(6),
Article 4(1), point (c) of Article 4(2), Article 6(2), Article 10(1),
point (g) of Article 10(2) and Article 16(4), it shall inform the
Commission thereof as well as of any subsequent changes. The
Commission shall make that information public on a website or
in another easily accessible way. Member States shall take the
appropriate measures
information amongst
to diffuse that
national creditors and consumers.

Article 27

Transposition

1.
Before … (*) Member States shall adopt and publish the
provisions necessary to comply with this Directive. They shall
forthwith inform the Commission thereof.

They shall apply those provisions from … (*).

When Member States adopt these provisions, they shall contain
a reference to this Directive or be accompanied by such refer-
ence on the occasion of their official publication. The methods
of making such reference shall be laid down by Member States.

2.
The Commission shall undertake every five years, and for
the first time … (**), a review of the thresholds laid down in
this Directive and the percentages used to calculate the
maximum compensation payable in the event of early repay-
ment, assessing them in the light of economic trends in the
Community and the situation of the market concerned. The
Commission shall also monitor the effect of the existence of the
regulatory choices
referred to in Article 2(5) and 2(6),
Article 4(1), point (c) of Article 4(2), Article 6(2), Article 10(1),
point (g) of Article 10(2) and Article 16(4) on the internal
market and consumers. The results shall be made known to the
European Parliament and the Council, accompanied where
appropriate by a proposal to modify the thresholds and percen-
tages as well as the above-mentioned regulatory choices accord-
ingly.

(*) Two years after the entry into force of this Directive.
(**) Five years after the entry into force of this Directive.

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ANNEX I

I. The basic equation expressing the equivalence of drawdowns on the one hand and repayments and charges on the

other

The basic equation, which establishes the annual percentage rate of charge (APR), equates, on an annual basis, the total
present value of drawdowns on the one hand and the total present value of repayments and payments of charges on
the other hand, i.e.:

Xm

Ck 1 þ X

ð

Þ(cid:0) tk ¼

k ¼ 1

where:

— X

is the APR,

— m

is the number of the last drawdown,

— k

is the number of a drawdown, thus 1 ≤ k ≤ m,

Xm′

l ¼ 1

Dl 1 þ X

ð

Þ(cid:0) sl

— Ck

— tk

is the amount of drawdown k,

is the interval, expressed in years and fractions of a year, between the date of the first drawdown and the
date of each subsequent drawdown, thus t1 = 0,

— m′

is the number of the last repayment or payment of charges,

— l

is the number of a repayment or payment of charges,

is the amount of a repayment or payment of charges,

is the interval, expressed in years and fractions of a year, between the date of the first drawdown and the
date of each repayment or payment of charges.

— Dl

— sl

Remarks:

(a) The amounts paid by both parties at different times shall not necessarily be equal and shall not necessarily be paid

at equal intervals.

(b) The starting date shall be that of the first drawdown.

(c)

Intervals between dates used in the calculations shall be expressed in years or in fractions of a year. A year is
presumed to have 365 days (or 366 days for leap years), 52 weeks or twelve equal months. An equal month is
presumed to have 30,41666 days (i.e. 365/12) regardless of whether or not it is a leap year.

(d) The result of the calculation shall be expressed with an accuracy of at least one decimal place. If the figure at the
following decimal place is greater than or equal to 5, the figure at that particular decimal place shall be increased
by one.

(e) The equation can be rewritten using a single sum and the concept of flows (Ak), which will be positive or negative,

in other words either paid or received during periods 1 to k, expressed in years, i.e.:

Xn

Ak 1 þ X

ð

Þ(cid:0) tk ,

S ¼

S being the present balance of flows. If the aim is to maintain the equivalence of flows, the value will be zero.

II. Additional assumptions for the calculation of the annual percentage rate of charge

k ¼ 1

(a)

if a credit agreement gives the consumer freedom of drawdown, the total amount of credit shall be deemed to be
drawn down immediately and in full;

(b)

if a credit agreement provides different ways of drawdown with different charges or borrowing rates, the total
amount of credit shall be deemed to be drawn down at the highest charge and borrowing rate;

(c)

(d)

if a credit agreement gives the consumer freedom of drawdown in general but imposes, amongst the different ways
of drawdown, a limitation with regard to the amount and period of time, the amount of credit shall be deemed to
be drawn down on the earliest date provided for in the agreement and in accordance with those drawdown limits;

if there is no fixed timetable for repayment, and no such timetable can be deduced from the terms of the credit
agreement and the means of repaying the credit granted, the duration of the credit shall be deemed to be one year
and the amount of the credit shall be assumed to be repaid in twelve equal instalments of capital at monthly
intervals;

(e)

if there is a fixed timetable for repayment but the amount of such repayments is flexible, the amount of each
repayment shall be deemed to be the lowest for which the agreement provides;

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(f) unless otherwise specified, where the credit agreement provides for more than one repayment date, the credit is to

be made available and the repayments made on the earliest date provided for in the agreement;

(g)

if the ceiling applicable to the credit has not yet been agreed, that ceiling is assumed to be EUR 1 000;

(h) in the case of an overdraft facility the total amount of credit shall be deemed to be drawn down in full and for the
whole duration of the credit agreement. If the duration of the credit agreement is not known the annual percentage
rate of charge shall be calculated on the assumption that the duration of the credit is three months;

(i)

(j)

if different interest rates and charges are offered for a limited period or amount, the interest rate and the charges
shall be deemed to be the highest rate for the whole duration of the credit agreement;

for consumer credit agreements for which a fixed borrowing rate is agreed in relation to the initial period, at the
end of which a new borrowing rate is determined and subsequently periodically adjusted according to an agreed
indicator, the calculation of the annual percentage rate shall be based on the assumption that, at the end of the
fixed borrowing rate period, the borrowing rate is the same as at the time of calculating the annual percentage
rate, based on the value of the agreed indicator at that time.

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ANNEX II

STANDARD EUROPEAN CONSUMER CREDIT INFORMATION

1. Identity and contact details of the creditor/credit intermediary

[Identity]

[Geographical address to be used by the consumer]

[Identity]

[Geographical address to be used by the consumer]

Creditor

Address

Telephone number (*)

E-mail address (*)

Fax number (*)

Web address (*)

If applicable

Credit intermediary

Address

Telephone number (*)

E-mail address (*)

Fax number (*)

Web address (*)

(*) This information is optional for the creditor.

Wherever ‘if applicable’ is indicated, the creditor must fill in the box if the information is relevant to the credit product
or delete the respective information or the entire row if the information is not relevant for the type of credit
considered.

Indications between square brackets provide explanations for the creditor and must be replaced with the corresponding
information.

2. Description of the main features of the credit product

The type of credit

The total amount of credit

This means the ceiling or the total sums made available under
the credit agreement.

The conditions governing the drawdown

This means how and when you will obtain the money.

The duration of the credit agreement

Instalments and, where appropriate, the order in which
instalments will be allocated

You will have to pay the following:

[The amount, number and frequency of payments to be
made by the consumer]

Interest and/or charges will be payable in the following
manner:

The total amount you will have to pay

[Sum of total amount of credit and total cost of credit]

This means the amount of borrowed capital plus interest and
possible costs related to your credit.

If applicable

The credit is granted in the form of a deferred payment
for a good or service or is linked to the supply of specific
goods or the provision of a service

Name of good/service

Cash price

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If applicable

Sureties required

[Kind of sureties]

This is a description of the security to be provided by you in
relation to the credit agreement.

If applicable

Repayments do not give rise to immediate amortisation of the
capital.

3. Costs of the credit

The borrowing rate or, if applicable,

[%

different borrowing rates which apply to the credit agree-
ment

— fixed, or
— variable (with the index or reference rate applicable to

Annual Percentage Rate of Charge (APR)

This is the total cost expressed as an annual percentage of the
total amount of credit.

The APR is there to help you compare different offers.

the initial borrowing rate),

— periods]

[% A representative example mentioning all the assump-
tions used for calculating the rate to be set out here]

Is it compulsory,
in order to obtain the credit or to
obtain it on the terms and conditions marketed, to take
out

Yes/no [if yes, specify the kind of insurance]

Yes/no [if yes, specify the kind of ancillary service]

— an insurance policy securing the credit, or
— another ancillary service contract.

If the costs of these services are not known by the creditor they
are not included in the APR.

Related costs

If applicable

Maintaining one or more accounts
recording both payment transactions and drawdowns

required for

is

If applicable

Amount of costs for using a specific means of payment
(e.g. a credit card)

If applicable

Any other costs deriving from the credit agreement

If applicable

Conditions under which the above-mentioned costs
related to the credit agreement can be changed

If applicable

Obligation to pay notarial fees

Costs in the case of late payments

Missing payments
(e.g. forced sale) and make obtaining credit more difficult.

could have severe consequences

for you

You will be charged [… (applicable interest rate and
arrangements for its adjustment and, where applicable,
default charges)] for missing payments

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4. Other important legal aspects

Right of withdrawal

Yes/no

You have the right
within a period of 14 calendar days.

to withdraw from the credit agreement

[Determination of the compensation (calculation method)
implementing
in
Article 16(2) of Directive …/…/EC]

accordance with

provisions

the

Early repayment

You have the right to repay the credit early at any time in full
or partially.

If applicable

The creditor is entitled to compensation in the case of
early repayment

Consultation of a database

The creditor must inform you immediately and without charge
of the result of a consultation of a database, if a credit applica-
tion is rejected on the basis of such a consultation. This does
not apply if the provision of such information is prohibited by
European Community law or is contrary to objectives of public
policy or public security.

Right to a draft credit agreement

You have the right, upon request, to obtain a copy of the draft
credit agreement free of charge. This provision does not apply if
the creditor is at the time of the request unwilling to proceed to
the conclusion of the credit agreement with you.

If applicable

This information is valid from … until …

The period of time during which the creditor is bound by
the pre-contractual information

If applicable

5. Additional information in the case of distance marketing of financial services

(a) concerning the creditor

If applicable

[Identity]

Representative of the creditor in your Member State of
residence

[Geographical address to be used by the consumer]

Address

Telephone number (*)

E-mail address (*)

Fax number (*)

Web address (*)

If applicable

Registration

If applicable

The supervisory authority

(b) concerning the credit agreement

If applicable

Exercise of the right of withdrawal

[The trade register in which the creditor is entered and his
registration number or an equivalent means of identifica-
tion in that register]

[Practical
instructions for exercising the right of with-
drawal indicating, inter alia, the period for exercising the
right, the address to which notification of exercise of the
right of withdrawal should be sent and the consequences
of non-exercise of that right]

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If applicable

The law taken by the creditor as a basis for the establish-
ment of relations with you before the conclusion of the
credit contract

If applicable

[Relevant clause to be set out here]

Clause stipulating the governing law applicable to the
credit agreement and/or the competent court

If applicable

Language regime

(c) concerning redress

Information and contractual terms will be supplied in
[specific language]. With your consent, we intend to
communicate in [specific language/languages] during the
duration of the credit agreement.

Existence of and access to out-of-court complaint and
redress mechanism

[Whether or not there is an out-of-court complaint and
redress mechanism for the consumer who is party to the
distance contract and, if so, the methods of access to it]

(*) This information is optional for the creditor.

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ANNEX III

EUROPEAN CONSUMER CREDIT INFORMATION FOR

(1) overdrafts

(2) consumer credit offered by certain credit organisations (Article 2(5) of Directive …/…/EC)

1. Identity and contact details of the creditor/credit intermediary

(3) debt conversion

[Identity]

[Geographical address to be used by the consumer]

[Identity]

[Geographical address to be used by the consumer]

Creditor

Address

Telephone number (*)

E-mail address (*)

Fax number (*)

Web address (*)

If applicable

Credit intermediary

Address

Telephone number (*)

E-mail address (*)

Fax number (*)

Web address (*)

(*) This information is optional for the creditor.

Wherever ‘if applicable’ is indicated, the creditor must fill in the box if the information is relevant to the credit product
or delete the respective information or the entire row if the information is not relevant for the type of credit
considered.

Indications between square brackets provide explanations for the creditor and must be replaced with the corresponding
information.

2. Description of the main features of the credit product

The type of credit

The total amount of credit

This means the ceiling or the total sums made available under
the credit agreement.

The duration of the credit agreement

How and when will you have to repay the credit?

If applicable

You may be requested to repay the amount of credit in
full on demand at any time

If applicable

The credit is granted in the form of a deferred payment
for a good or service

Name of good/service

Cash price

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3. Costs of the credit

The borrowing rate or, if applicable,

[%

different borrowing rates which apply to the credit agree-
ment

— fixed, or
— variable (with the index or reference rate applicable to

the initial borrowing rate)]

If applicable

The annual percentage rate of charge (APR) (*)

This is the total cost of credit expressed as an annual percentage
of the total amount of credit. The APR is there to help you
compare different offers.

If applicable

Costs

If applicable

The conditions under which those costs may be changed

Costs in the case of late payments

[% A representative example mentioning all the assump-
tions used for calculating the rate to be set out here]

[The costs applicable from the time the credit agreement
is concluded]

You will be charged [… (applicable interest rate and
arrangements for its adjustment and, where applicable,
default charges)] for missing payments

(*) Not applicable to European Consumer Credit Information for overdrafts in those Member States which decide on the basis of

Article 6(2) of Directive …/…/EC that the APR need not be provided for overdrafts.

4. Other important legal aspects

Termination of the credit agreement

[The conditions and procedure for terminating the credit
agreement]

Consultation of a database

The creditor must inform you immediately and without charge
of the result of a consultation of a database if a credit applica-
tion is rejected on the basis of such a consultation. This does
not apply if the provision of such information is prohibited by
European Community law or is contrary to objectives of public
policy or public security.

Right to a draft credit agreement

You have the right, upon request, to obtain a copy of the draft
credit agreement free of charge. This provision does not apply if
the creditor is at the time of the request unwilling to proceed to
the conclusion of the credit agreement with you.

If applicable

This information is valid from … until …

The period of time during which the creditor is bound by
the pre-contractual information

If applicable

5. Additional information to be given where the pre-contractual information is provided by certain credit organisations

(Article 2(5) of Directive …/…/EC) or relates to a consumer credit for debt conversion

Instalments and, where appropriate, the order in which
instalments will be allocated

You will have to pay the following:

[Representative example of an instalment table including
the amount, number and frequency of payments to be
made by the consumer]

The total amount you will have to pay

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Early repayment

You have the right to repay the credit early at any time in full
or partially.

If applicable

The creditor is entitled to compensation in the case of
early repayment

If applicable

[Determination of the compensation (calculation method)
in
implementing
Article 16(2) of Directive …/…/EC]

accordance with

provisions

the

6. Additional information to be given in the case of distance marketing of financial services

(a) concerning the creditor

If applicable

[Identity]

Representative of the creditor in your Member State of
residence

[Geographical address to be used by the consumer]

Address

Telephone number (*)

E-mail address (*)

Fax number (*)

Web address (*)

If applicable

Registration

If applicable

[The trade register in which the creditor is entered and his
registration number or an equivalent means of identifica-
tion in that register]

The supervisory authority

(b) concerning the credit agreement

Right of withdrawal

Yes/no

You have the right
within a period of 14 calendar days.

to withdraw from the credit agreement

If applicable

Exercise of the right of withdrawal

If applicable

The law taken by the creditor as a basis for the establish-
ment of relations with you before the conclusion of the
credit contract

[Practical
instructions for exercising the right of with-
drawal indicating, inter alia, the address to which notifica-
tion of exercise of the right of withdrawal should be sent
and the consequences of non-exercise of that right]

If applicable

[Relevant clause to be set out here]

Clause stipulating the law applicable to the credit agree-
ment and/or the competent court

If applicable

Language regime

(c) concerning redress

Information and contractual terms will be supplied in
[specific language]. With your consent, we intend to
communicate in [specific language/languages] during the
duration of the credit agreement.

Existence of and access to out-of-court complaint and
redress mechanism

[Whether or not there is an out-of-court complaint and
redress mechanism for the consumer who is party to the
distance contract and, if so, the methods of access to it]

(*) This information is optional for the creditor.

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STATEMENT OF THE COUNCIL'S REASONS

I.

INTRODUCTION

1. On 12 September 2002, the Commission submitted to the Council its proposal for a Directive of the
European Parliament and of the Council on the harmonisation of the laws, regulations and adminis-
trative provisions of the Member States concerning credit for consumers (1).

2. The Economic and Social Committee adopted its opinion on 17 July 2003 (2).

3. The European Parliament gave its opinion on 20 April 2004 (first reading) (3).

4. In the light of the European Parliament's opinion, the Commission submitted on 29 October 2004

an amended proposal (4).

5. In November 2004, the Commission decided to undertake further consultations on the draft direc-
tive, following which it transmitted on 10 October 2005 to the Council the proposal as amended for
the second time, in the form of a modified (5) proposal for a Directive of the European Parliament
and of the Council on credit agreements for consumers.

6. In this consolidated modified proposal, based on Article 95 of the Treaty, the Commission took due
account of the position expressed in the European Parliament's first-reading opinion and incorporated
110 of the 152 amendments proposed therein.

7. On 20 September 2007, the Council adopted its common position in accordance with Article 251(2)

of the Treaty.

II. OBJECTIVE

The Commission considered that the transposition of Directive 87/102/EEC had resulted in Member
States going beyond the Directive's provisions to varying degrees. These differences in national legisla-
tions in some cases constitute obstacles to the internal market and dissuade businesses from offering
their products across national borders. The consumer credit market remains to a large extent fragmented
into the Member States' 27 national markets, thus hindering European consumers and creditors from
making cross-border offers and contracts and therefore benefiting from the advantages of a single
market.

Against this background, the Commission presented its proposal, which was substantially modified in
October 2005 following the first-reading opinion of the European Parliament and sought to:

— establish the conditions for a genuine internal market,

— ensure a high level of consumer protection, and

— improve the clarity of Community legislation by recasting the three existing Directives on consumer

credit (87/102/EEC, 90/88/EEC and 98/7/EC).

III. ANALYSIS OF THE COMMON POSITION

1. General

The Council based its discussion on the modified proposal presented by the Commission in October
2005. In general, it endorsed the European Parliament's first-reading opinion, already reflected to a
large extent in that proposal.

(1) OJ C 331 E, 31.12.2002, p. 200.
(2) OJ C 234, 30.9.2003, p. 1.
(3) OJ C 104 E, 30.4.2004, pp. 35, 233-260 and 8493/04.
(4) 14246/04.
(5) 13193/05.

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The Council also shared the view that the directive should ensure a high level of harmonisation in
substantial areas covered by its scope and should represent a ‘European added value’ for the internal
market, consumer choice and consumer protection. The Council identified five main areas in which
such a ‘European added value’ should be achieved:

— pre-contractual information (Articles 5 and 6),

— contractual information (Article 10),

— right of withdrawal (Article 14),

— early repayment (Article 16), and

— calculation of the Annual Percentage Rate (APR) (Article 19).

The Council also introduced other modifications with respect to:

— the scope of the draft directive by, on the one hand, excluding a number of situations in Articles 2
and 20 and, on the other, covering in more detail some specific issues such as advertising
(Article 4), overdrafts (Articles 6 and 12) or overrunning (Article 18),

— the level of harmonisation, especially the Commission's proposal to couple full harmonisation

with targeted mutual recognition (Article 22),

— the use of comitology (Article 25),

— the transparency on regulatory choices taken by Member States in areas not fully harmonised

(Article 26) and the related review clause (Article 27(2)).

The Commission accepted the common position agreed by the Council.

2. Main changes introduced by the Council in the modified proposal of the Commission

The Council introduced in its common position a number of modifications related to the following
issues:

A. Scope (Article 2)

The Council streamlined the scope of the draft Directive (already limited following the exclusion
of mortgage credit agreements, surety agreements and guarantors and the introduction of a light
regime for overdrafts).

In that respect, the Council agreed the following changes to the scope of the draft Directive:

— a comprehensive exclusion of credits related to immovable properties (paragraph 2(a) and (b))
and of surety agreements, owing to their relationship with the question of mortgage credit,

— the exclusion of small credits (below 200 euro) and wider coverage for larger credits by

increasing the upper limit from EUR 50 000 to 100 000 (paragraph 2(c)),

— the exclusion of short-term overdrafts to be repaid within one month (paragraph 2(e)),

— the exclusion of credits that are free of any interest and charges and the exclusion of

short-term credits with very small charges (paragraph 2(f)).

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The Council also agreed on specific ‘light’ regimes for particular types of credits, namely overdraft
facilities (paragraph 3), overrunning (paragraph 4), credits offered by certain organisations with
restricted membership and established for the mutual benefit of its members (paragraph 5) and
credits for deferred payments (paragraph 6).

In agreeing to the above changes, the Council in its common position:

(i) Took on board, in full or in part, 24 amendments (2, 4, 5, 8, 10, 34, 38, 39, 47, 48 and
178, 49, 50, 51, 53, 54, 55, 56, 59, 61, 121, 145, 184, 185), including amendments 184
and 185 not accepted by the Commission, as follows:

Amendment 184: the Council confirmed the deletion in the new Article 2(2)(e)

Amendment 185: the Council took over the limit of EUR 100 000 in Article 2(2) (c), but not
the remainder of the amendment.

(ii) Did not introduce 4 amendments (11, 57, 60, 123).

B. Pre-contractual information (Articles 5 and 6)

The Council considered that consumers should receive sufficient information to allow them to
make informed and responsible decisions before signing the contract. To that effect, the Council
made the following changes:

— deletion of the principle of responsible lending in Article 5, as this was considered to create
some legal uncertainty. Instead, an obligation for creditors to assess the creditworthiness of
the consumer was introduced in the new Article 8,

— extension of the list of pre-contractual information to be provided to the consumer under

Articles 5(2) and 6(1),

— creation of a ‘Standard European Consumer Credit Information’ form (new Annex II) and of a
‘European Consumer Credit Information for Overdrafts’ form (new Annex III) for the provi-
sion of pre-contractual
information. These standard forms, which include information as
provided for in Articles 5 and 6, will make it easier for consumers to compare different offers,
including on a cross-border basis,

— clarification on what pre-contractual information shall be provided in case of voice telephony
communications as referred to in Article 3(3) of Directive 2002/65/EC (Distance selling of
financial services) and if the consumer requests that the overdraft facility be made available
with immediate effect (Article 6(4)),

— flexibility left
(Article 6(2)),

to Member States as regards the indication of

the APR for overdrafts

— introduction of an obligation (Articles 5(4) and 6(6)) to supply to the consumer with a copy
of a credit agreement if he so requests (combined with the information about this right given
in the above-mentioned European standard form).

In agreeing to above changes, the Council in its common position:

(i) Took on board, in full or in part, 6 amendments (16, 17, 18, 65 and 188, 179).

(ii) Did not introduce 2 amendments (19, 28).

C. Contractual information (Article 10)

In relation to the changes made to the list of pre-contractual
information, the Council also
extended the list of information to be provided to the consumer at the time of the conclusion of
the credit agreement (mostly in parallel with the additions made in Articles 5(2) and 6(1)). In
information must be provided to the
accordance with Article 10(2), the following additional
consumer:

— the type of credit: point (a),

— a description of the product and service and its cash price in cases of deferred payment:

point (e),

— an amortisation table, also where a variable interest rate applies: point (i),

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— more comprehensive information on charges related to the credit agreement and the condi-

tions for changing them: point (k),

— a warning on the consequences of missing payments: point (m),

— more comprehensive information on the right of withdrawal: point (q),

— information on the existence of alternative redress mechanisms: point (s),

— a reference to other contractual terms and conditions: point (t), and

— the name and address of the competent supervisory authority: point (u).

In agreeing to the above changes, the Council in its common position:

(i) Took on board, in full or in part, 10 amendments (77, 78, 81, 82, 83, 85, 86, 87, 88, 89).

(ii) Did not introduce 3 amendments (76, 79, 84), including amendment 84 accepted by the

Commission.

D. Right of withdrawal (Article 14)

The Council agreed to provide for a uniform right of withdrawal of 14 calendar days. The
Council clarified the obligations of consumers when exercising their right of withdrawal and the
interlink with the right of withdrawal provisions in Directives 85/577/EEC (Doorstep selling) and
2002/65/EC (Distance selling of financial services). These clarifications are the following:

— addition of the obligation for the consumer to repay to the creditor, within 30 days of the
date of withdrawal notification, the amount of credit already drawn down, including interest
(paragraph 2(b)),

— addition of a provision on the cancellation of the ancillary service related to the credit agree-

ment in the event of withdrawal from the credit agreement (paragraph 3),

— in cases of distance or doorstep selling of consumer credits, the right of withdrawal will be
regulated in accordance with the provisions of the consumer credit Directive and not in
accordance with Directives 85/577/EEC and 2002/65/EC,

— Member States may provide that the right of withdrawal does not apply if the credit agree-

ment has been concluded through the services of a notary.

By agreeing to the above changes, the Council in its common position:

(i) Took on board, in full or in part, 3 amendments (20, 192, 193), including amendment 193
which was not accepted by the Commission and which the Council added in the new
wording of Article 14(4), after drafting modifications.

(ii) Did not introduce one amendment (107).

E. Early repayment (Article 16)

While recognising the right of a consumer to repay a credit earlier, the Council agreed to grant
creditors a limited right to compensation for possible costs directly linked to early repayment
(paragraph 2).

The compensation will apply only if:

— it is related to credit agreements with a fixed borrowing rate, and

— the applicable reference interest rate decreases between the moment of the conclusion of the

credit agreement and the early repayment.

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The compensation is further limited to 1 % of the amount of the credit repaid early (or 0,5 % if
repayment takes place within the final year of the credit agreement) and must not exceed the
amount of the interest that the consumer would have paid if there had been no early repayment.

In addition, flexibility was left to Member States to set in their national legislation the threshold
under which no indemnity has to be paid. This threshold may be set between 0 and EUR 10 000
of early repayment within 12 months (paragraph 4).

With respect to early repayment, the Council in its common position:

(i) Took on board one amendment (201).

(ii) Did not

introduce one amendment

(25) accepted by the Commission, as the Council
wanted to raise the level of harmonisation for determining the compensation to be paid to
the creditor in the event of early repayment of the credit.

F. Calculation of the APR (Article 19)

The Council provided for a uniform means of calculating the APR and included a standard set of
assumptions to be used by credit providers for APR calculations in different circumstances (set
out in Annex I, paragraph II). In order to cope with the product innovations and the need to
calculate the APR for possible new types of credits in the future, the Council introduced a comi-
tology provision under the regulatory procedure with scrutiny to determine additional assump-
tions if necessary (new paragraph 5). Consequently, the Council set up an appropriate committee
in Article 25.

With respect to the annual percentage rate of charge, the Council in its common position:

(i)

Introduced, in full or in part, 10 amendments (23, 24, 40, 42, 43, 151, 152, 195, 198, 199).

(ii) Did not include 7 amendments (148, 149, 150, 183, 194, 196, 197)

in the common

position.

G. Mutual recognition clause (Article 22)

The Council considered that the implementation of a mutual recognition clause as proposed by
the Commission, i.e. a clause that would complement the minimum harmonisation on certain
specific issues, would not fulfil the objectives of the proposed Directive. It would be too difficult
for consumers to understand and might lead to legal uncertainty owing to the application of the
law of different Member States. Therefore,
the Council deleted this clause (in the former
Article 21(2)).

To that effect, the Council in its common position:

(i)

Introduced one amendment (6).

(ii) Did not introduce 3 amendments (30, 140, 204).

As a supplementary measure, the Council added a new Article 26 in order to ensure transparency
concerning regulatory choices allowed for Member States in respect of those issues where full
harmonisation was not achieved and flexibility was left to Member States (Articles 2(5), 2(6),
4(1), 4(2)(c), 6(2), 10(1), 10(2)(g) and 16(4)).

H. Review by the Commission (Article 27(2))

The Council agreed that the periodic five-year review conducted by the Commission should also
include:

— a review of the percentages used to limit maximum compensation in the event of early repay-

ment, and

— monitoring of the effects on the internal market and consumers and publication of regulatory

choices as reported by Member States under Article 26.

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I. Other issues

In addition to the changes to Article 2 of the proposed Directive already mentioned in part A
above, the Council endorsed the Commission's modified proposal of October 2005 in limiting
the scope of other provisions, notably simplifying the wording on Database access (Article 9) and
Assignment of rights (Article 17) and deleting a number of Articles (namely on Joint and several
liability, which in turn prompted the need for a new Article 15 on Linked credit agreements).

Furthermore, the Council considered that the coverage of some other issues should be less
prescriptive and in particular deleted some provisions in Article 20 regarding the obligation to
supervise or regulate credit intermediaries.

Consequently, the Council in its common position:

(i)

Introduced, in full or in part, 45 amendments (1, 3, 7, 9, 12, 13, 14, 15, 21, 27, 29, 37, 46,
64, 67, 68, 69, 70, 71, 72, 74, 75, 102, 104, 105, 106, 108, 109, 124, 125, 132, 133, 134,
135, 136 and 162, 138, 139, 143, 144, 146, 147, 176, 180, 182) as follows:

Amendment 1: partly taken into consideration, with drafting modifications,
wording of Recital 3

in the new

Amendment 3: partly taken into consideration, with drafting modifications,
wording of Recital 4

in the new

Amendment 7: partly taken into consideration, with drafting modifications,
wording of Recital 7

in the new

Amendment 9: taken into consideration, with drafting modifications, in the new wording of
Recital 6

Amendment 12: accepted in full (deletion of the Recital)

Amendment 13: accepted in full (deletion of the Recital)

Amendment 14: partly taken into consideration, with drafting modifications,
wording of Recital 27

in the new

Amendment 15: accepted in full (deletion of the Recital)

Amendment 27: partly taken into consideration, with drafting modifications,
wording of Recital 39

in the new

Amendment 29: partly taken into consideration, with drafting modifications (partial deletion),
in the new wording of Recital 42

Amendment 37: taken into consideration, with drafting modifications, in the new wording of
Article 3, point (f)

Amendment 46: accepted in full (deletion of the point in Article 3)

Amendment 64: accepted in full (deletion of the Article)

Amendment 67: accepted in full (new heading of Chapter III)

Amendment 68: accepted in full (deletion of the Article)

Amendment 69: taken into consideration, with drafting modifications, in the new heading of
for Article 9

Amendment 70: accepted in full (deletion of the subparagraph)

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Amendment 71: accepted in full (deletion of the subparagraph)

Amendment 72: taken into consideration, with drafting modifications, in Article 9(1)

Amendment 74: accepted in full (deletion of the subparagraph)

Amendment 75: accepted in full (deletion of the subparagraph)

Amendment 102: fully taken into consideration, with drafting modifications,
wording of Article 17

in the new

Amendment 104: accepted in full (new heading of Article 15)

Amendment 105: partly taken into consideration, with drafting modifications, in the new
wording of Article 15(1)

Amendment 106: partly taken into consideration in the new wording of Article 15(1)

Amendment 108: partly taken into consideration in the new wording of Article 15(2)

Amendment 109: accepted in full (deletion of the Article)

Amendment 124: accepted in full (deletion of the paragraph)

Amendment 125: accepted in full (deletion of the Article)

Amendment 132: accepted in full (deletion of the heading)

Amendment 133: accepted in full (deletion of the paragraph)

Amendment 134: accepted in full (deletion of the paragraph)

Amendment 135: accepted in full (deletion of the Article)

Amendments 136 and 162: partly taken into consideration, with drafting modifications, in
the new wording of Article 20

Amendment 138: accepted in full (deletion of the Article)

Amendment 139: taken into consideration, with drafting modifications, in the new wording
of Article 21

Amendment 143: fully taken into consideration, with drafting modifications,
wording of Article 24

in the new

Amendment 144: accepted in full (deletion of the Article)

Amendment 146: accepted in full (deletion of the paragraph)

Amendment 147: accepted in full (deletion of the paragraph)

Amendment 176: partly taken into consideration, with drafting modifications, in the new
wording of Article 3, point (n)

Amendment 180: partly taken into consideration, with drafting modifications, in the new
wording of Article 9(2).

This also includes the following two amendments not accepted by the Commission:

Amendment 21: the deletion of text mentioned in this amendment was confirmed

Amendment 182: the deletion of text mentioned in this amendment was confirmed.

(ii) Did not include 13 amendments (26, 31, 33, 44, 45, 95, 126, 137, 141, 142, 161, 165,

181).

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The Council also endorsed the view taken by the Commission in its modified proposal of
October 2005 that a number of specific issues should be more precisely covered. Consequently,
the Council agreed to:

— include linked transactions (new Article 15) in the Directive,

— a more prescriptive regime for advertising concerning standard information (Article 4(2)),
while leaving flexibility to Member States on certain credit agreements and on the indication
of the APR (see Article 4(2)(c) and deletion of the former paragraphs 3 and 4 of Article 4),

— specific provisions on overdraft facilities in case of increase of the borrowing rate (Article 12),

— cover overrunnings under a regime similar to credit agreements and overdrafts (notably
regarding pre-contractual information), with a view to creating legal certainty; the Council
also deleted provisions involving rectifying the situation through a new credit agreement in
cases of significant overrunnings exceeding three months and introduced provisions which
allow more flexibility (Article 18, paragraph 3), by leaving the regulation of this situation to
national legislation,

— a more accurate wording on Information on the borrowing rate (Article 11) and Open-end

credit agreements (Article 12), in order to better protect consumers.

In relation to the above, the Council in its common position:

(i)

Introduced, in full or in part, 9 amendments (62, 94, 111, 113, 115, 116, 117, 129, 130) as
follows:

Amendment 62: partly taken into consideration, with drafting modifications,
wording of Article 4

in the new

Amendment 94: accepted in full (deletion of the subparagraph)

Amendment 111: accepted in full (deletion of the point in Article 12)

Amendment 113: accepted in full (deletion of the point in Article 12)

Amendment 115: accepted in full (deletion of the point in Article 12)

Amendment 116: accepted in full (deletion of the point in Article 12)

Amendment 117: partly taken into consideration, with drafting modifications, in the new
wording of Article 12(2)

Amendment 129: accepted in full (deletion of the paragraph)

Amendment 130: accepted in full (deletion of the paragraph).

(ii) Did not include 9 amendments (92, 93, 110, 112, 114, 120, 131, 175, 187).

In relation to three amendments accepted by the Commission but not included in the
common position:

Amendment 120: this amendment was not taken over by the Council due to the nature of
open-end credit agreements and the sufficient level of consumer protection in Article 13

Amendment 131: the deletion of text mentioned in the amendment was confirmed by the
Council

Amendment 187: the Council deleted former Article 4(4) but reinforced information on the
borrowing rate in Article 4(2)(a).

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3. European Parliament amendments

In its plenary vote on 20 April 2004, the European Parliament adopted 152 amendments to the
Commission's initial proposal. The Commission incorporated 110 amendments into its modified
proposal.

The Council introduced in the common position 104 amendments accepted by the Commission and
5 amendments not accepted by the Commission.

The Council did not include in the common position 6 amendments accepted by the Commission
and 37 amendments not accepted by the Commission.

IV. CONCLUSION

The Council considers that its common position, which incorporates 109 amendments detailed in part
III, takes good account of the European Parliament's first-reading opinion.

Taking into account also the other innovations agreed by the Council, the common position represents
a balance of concerns and interests, ensuring a high level of consumer protection and a good func-
tioning of the internal market, in line with the European Parliament's first-reading opinion and the
Commission's modified proposal.