CELEX: 51997PC0127
Language: en
Date: 1997-03-21
Title: Amended proposal for a EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE amending Directive 87/102/EEC (as amended by Directive 90/88/EEC) for the approximation of laws, regulations and administrative provisions of the Member States concerning consumer credit: single mathematical formula for the Annual Percentage Rate of Charge (APR)

3 . 5 . 97           1 EN |                 Official Journal of the European Communities                     No C 137 / 9
                                                                      II
                                                              (Preparatory Acts)
                                                         COMMISSION
               Amended proposal for a European Parliament and Council Directive amending Directive
                87/ 102/EEC (as amended by Directive 90/88/EEC) for the approximation of laws, regulations
                and administrative provisions of the Member States concerning consumer credit : single
                            mathematical formula for the annual percentage rate of charge (APR) (')
                                                               (97/C 137/07 )
                                                          (Text with EEA relevance)
                                                COM(97) 127 final — 96/005 5(COD)
                (Submitted by the Commission pursuant to Article 189a (2) of the EC Treaty on 21 March 1997)
                0 ) OJ No C 235 , 13 . 8 . 1996, p . 8 .
           ORIGINAL PROPOSAL OF THE COMMISSION                                         AMENDED PROPOSAL
THE EUROPEAN PARLIAMENT AND THE COUNCIL                                   THE EUROPEAN PARLIAMENT AND THE COUNCIL
OF THE EUROPEAN UNION,                                                    OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European                     Unchanged
Community, and in particular Article 100a thereof,
Having regard to the proposal of the Commission ('),
Having regard to the opinion of the Economic and
Social Committee (2 ),
Acting in accordance with the procedure laid down in
Article 189b of the Treaty,
Whereas it is desirable, in order to promote the estab­
lishment and functioning of the internal market and to
ensure that consumers benefit from a high level of
protection, that one method of calculating the annual
percentage rate of charge should be used throughout the
European Community ;
Whereas Article 5 of Council Directive 87/ 102/EEC (3 )
provides for the introduction of a Community method or
methods of calculating the annual percentage rate of
charge for consumer credit ;
O OJ No C 235 , 13 . 8 . 1996 , p . 8 .
 (2 ) OJ No C 30 , 30 . 1 . 1997 , p . 94 .
 O OJ No L 42 , 12 . 2 . 1987, p . 48 .
 ---pagebreak--- No C 137 / 10      [ EN                    Official Journal of the European Communities                                3 . 5 . 97
         ORIGINAL PROPOSAL OF THE COMMISSION                                           AMENDED PROPOSAL
Whereas, in order to introduce this single method, it is
desirable to draw up a single mathematical formula for
calculating the annual percentage rate of charge and for
determining the credit cost items to be used in the calcu­
lation by indicating those costs which must not be taken
into account ;
Whereas     Annex       II    to     Directive    90/ 88 /EEC ()
introduced a mathematical formula for the calculation of
the annual percentage rate of charge and Article 1 (2 ) of
Directive 90/ 88 /EEC provided the charges to be
excluded from the calculation of the 'total cost of credit
to the consumer':
Whereas during a transitional period of three years from
1 January 1993 , Member States which prior to 1 March
1990 applied laws which permitted the use of another
mathematical formula for calculating the annual
percentage rate of charge, were permitted to continue to
apply such laws ;
Whereas the Commission has submitted a report (2 ) to
the Council which makes it possible, in the light of
experience, to apply a single Community mathematical
formula for calculating the annual percentage rate of
charge ;
Whereas, since   no Member State has made use of Article
 la (3 ) of the   Directive by which certain costs were
excluded from    the calculation of the annual percentage
rate of charge   in certain Member States, it has become
 obsolete ;
Whereas accuracy to two decimal places and the use of a              Whereas accuracy to two decimal places is necessary;
 365- or 366-day year is necessary ;
                                                                      Whereas the annual percentage rate of charge should be
                                                                      calculated on the basis of a uniform calculation method
                                                                      which assumes either a calendar, 365- (or for leap years
                                                                      366 ) day year or a standard, 365-day year ;
 0 ) OJ No L 61 , 10 . 3 . 1990 , p. 14 .
 O COM(96 ) 79 .
 ---pagebreak--- 3. 5. 97            | EN |              Official Journal of the European Communities                         No C 137/ 11
         ORIGINAL PROPOSAL OF THE COMMISSION                                        AMENDED PROPOSAL
Whereas it is desirable that consumers should be able to          Whereas it is desirable that consumers should be able to
recognize the terms used in different Member States to            recognize the terms used in different Member States to
indicate the 'annual percentage rate of charge', and that         indicate the 'annual percentage rate of charge',
the use of a common symbol, in addition to the existing
term, should be mandatory in all consumer credit adver­
tisements and written agreements with consumers
throughout the European Community,
HAVE ADOPTED THIS DIRECTIVE :                                     HAVE ADOPTED THIS DIRECTIVE :
                            Article 1                             Deleted
Whenever the term 'annual percentage rate of charge',
or the equivalent term in another Community language,
is used as required by Directive 87 / 102/EEC, it shall be
accompanied by the following symbol :
                            Article 2                                                      Article 1
 Article la ( 1 ) (a) shall be replaced by the following :         Unchanged
 — in the Greek language version of the Directive :
     'To συνολικό ετήσιο πραγματικό ποσοστό επιβάρυνσης
     που εξισώνει σε ετήσια 6άση τις παρούσες αξίες του
     συνόλου των τρεχουσών ή μελλοντικών υποχρεώσεων
     (δανείων, εξοφλήσεων και επιβαρύνσεων) που έχουν
     αναληφθεί από το δανειστή και το (δανειζόμενο)
     καταναλωτή, υπολογίζεται σύμφωνα με το μαθηματικό
     τύπο που παρατίθεται στο παράρτημα II',
 — in the English language version of the Directive :
      'The annual percentage rate of charge which shall be
      that rate, on an annual basis which equalizes the
      present value of all commitments (loans, repayments
      and charges), future or existing, agreed by the
      creditor and the borrower, shall be calculated in
      accordance with the mathematical formula set out in
      Annex II'.
                             Article 3                                                      Article 2
  Article la (3 ) shall be deleted.                                 Unchanged
 ---pagebreak---  No C 137 / 12        EN                Official Journal of the European Communities                               3 . 5 . 97
          ORIGINAL PROPOSAL OF THE COMMISSION                                      AMENDED PROPOSAL
                           Article 4                                                     Article 3
Article la (5 ) shall be deleted.                                 Unchanged
                           Article 5                              Deleted
Article 3 shall be amended as follows :
     'Article 3
    Without prejudice to Council Directive 84/450/EEC
    of 10 September 1984 relating to the approximation
    of the laws, regulations and administrative provisions
    of the Member States concerning misleading adver­
    tising (1 ), as amended by Council Directive . . . of . . .
     1996 concerning comparative advertising, and to the
    rules and principles applicable to unfair advertising,
    any advertisement, or any offer which is displayed at
    business premises, in which a person offers credit or
    offers to arrange a credit agreement and in which a
    rate of interest or any figures relating to the cost of
    the credit are indicated, shall also include a statement
    of the annual percentage rate of charge, accompanied
    by the symbol as mentioned in Article 1 of this
    Directive, by means of a representative example if no
    other means is practicable.'
                           Article 6                              Deleted
Article 4 (2) (a) shall be amended as follows :
    '(a) a statement of the annual percentage rate of
          charge, accompanied by the symbol as
          mentioned in Article 1 of this Directive'.
                           Article 7                                                    Article 4
Annex I attached hereto shall become Annex II,                    Unchanged
replacing Annex II of Directive 87/ 102/EEC (as
amended by Directive 90/ 88/EEC).
                           Article 8                                                    Article 5
Annex II attached hereto shall become Annex III,                  Unchanged
replacing Annex III to Directive 87/ 102/EEC (as
amended by Directive 90/88/EEC).
                          Article 9                                                     Article 6
1 . Member States shall bring into force the laws,                1 . Member States shall bring into force the laws,
regulations and administrative provisions necessary for           regulations and administrative provisions necessary for
them to comply with this Directive no later than                  them to comply with this Directive no later than
31 December 1996 and shall inform the Commission                  1 January 1999 and shall inform the Commission
thereof.                                                          thereof.
0 ) OJ No L 250 , 19. 9. 1984 , p. 17.
 ---pagebreak--- 3 . 5 . 97                EN                    Official Journal of the European Communities              No C 137 / 13
            ORIGINAL PROPOSAL OF THE COMMISSION                                          AMENDED PROPOSAL
When Member States adopt those measures, they shall                       Unchanged
include references to this Directive or shall accompany
them with such references on their official publication.
The Member States shall lay down the manner in which
such references shall be made .
2.      The     Member       States  shall   communicate      to the      Unchanged
Commission the texts of the provisions of national law
which they adopt in the field governed by this Directive.
                               Article 10                                                      Article 7
This Directive is addressed to the Member States .                        Unchanged
                                ANNEX I                                                        ANNEX I
                                ANNEX II                                                       ANNEX II
                          BASIC EQUATION                                                   BASIC EQUATION
 THE BASIC EQUATION EXPRESSING THE EQUIV­                                 THE BASIC EQUATION EXPRESSING THE EQUIV­
 ALENCE         OF    LOANS      ON    THE      ONE     HAND    AND        ALENCE OF LOANS ON THE ONE HAND AND
       REPAYMENTS AND CHARGES ON THE OTHER                                    REPAYMENTS AND CHARGES ON THE OTHER
                                        K' = m'                            Unchanged
               \          AK        _ X1             A'K'
               K=1 (l + i) tK           K'= 1        +
 where :
 K       is the number of a loan,
 K'      is the number of a repayment or a payment of charges,
 AK      is the amount of loan number K,
 A'K' is the amount of repayment number K',
 E       represents a sum,
 m       is the number of the last loan,
 m'      is the number of the last repayment or payment of
          charges,
  tj,     is the interval, expressed in years and fractions of a year,
          between the date of loan No 1 and those of subsequent
          loans Nos 2 to m,
  tj,,    is the interval, expressed in years and fractions of a year,
          between the date of loan No 1 and those of repayments
          or payments of charges Nos 1 to m',
 ---pagebreak--- No C 137/ 14         fENl                  Official Journal of the European Communities                                         3 . 5 . 97
         ORIGINAL PROPOSAL OF THE COMMISSION                                              AMENDED PROPOSAL
i     is the percentage rate that can be calculated (either by
      algebra, by successive approximations, or by a computer
      program) where the other terms in the equation are
      known from the contract or otherwise.
Remarks :
(a) The amounts paid by both parties at different times shall not    Unchanged
    necessarily be equal and shall not necessarily be paid at
    equal intervals.
(b) The starting date shall be that of the first loan.
(c) Intervals between dates used in the calculations shall be        (c) Intervals between dates used in the calculations shall be
    expressed in years or in fractions of a year. A year is              expressed in years or in fractions of a year. A year shall be
    presumed to have 365 or 366 days.                                    taken to be either : (i) a calendar year comprising 365 or, for
                                                                         leap years, 366 days, or (ii) a standard year comprising 365
                                                                         days, 52 weeks or 12 equal months. An equal month is
                                                                         presumed to have 30,41666 days (i.e. 365 / 12 ).
(d) The result of the calculation shall be expressed with an         Unchanged'
    accuracy of 2 decimal places. If the figure at the third
    decimal place is greater than or equal to 5, the figure at the
    second decimal place shall be increased by one.'