CELEX: 51979PC0069
Language: en
Date: 1979-02-21
Title: PROPOSAL FOR A COUNCIL DIRECTIVE RELATING TO THE APPROXIMATION OF THE LAWS, REGULATIONS AND ADMINISTRATIVE PROVISIONS OF THE MEMBER STATES CONCERNING CONSUMER CREDIT

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