Verbatim report of proceedings

Tuesday, 15 January 2008 - Strasbourg

7. Consumer credit (debate)

  President. − The next item is the recommendation for second reading of the report by Kurt Lechner, on behalf of the Committee on the Internal Market and Consumer Protection, on the common position of the Council with a view to the adoption of a directive of the European Parliament and of the Council on consumer credit and repealing Directive 87/102/EEC (09948/2/2007 - C6-0315/2007 - 2002/0222 (COD)) (A6-0504/2007).

  Kurt Lechner, rapporteur. − (DE) Mr President, Commissioner Kuneva, ladies and gentlemen, obtaining credit is a different matter from purchasing goods. The legal complexity of the transaction is far greater, and established national financing practices and legal traditions play a far greater part. Accordingly, public trust is often crucial in matters relating to consumer credit. Against this backdrop, harmonisation of the law on consumer credit has its limits and should be done cautiously and gradually.

As the weaker party to the contract, the consumer must undoubtedly receive legal protection, but at the same time the guiding principles in this field, as in the law of obligations in general, must be freedom of contract and the personal responsibility of grown-up people, not prescription and paternalism. National legislators must have enough discretion to guarantee consumer protection flexibly in their own countries and to deal quickly with awkward new developments in the sphere of consumer protection. A body of legal provisions alone does not ensure that consumers are actually protected. Impact assessments would have been essential, given that consumer credit affects hundreds of millions of people. Legislation should be based on typical case scenarios and not on exceptions.

In this respect, I must first of all thank the European Parliament as a whole for rejecting the Commission’s totally unacceptable initial proposal and for amending it substantially and decisively at first reading. Secondly, I welcome wholeheartedly the new approach adopted by the Commission in its amended proposal dating from 2005, whereby only specific fundamental elements would ultimately be harmonised.

I must, however, criticise the Council’s common position. Instead of focusing on a sound practicable European solution, the representatives of the Member States have been introducing their own specific rules, defending them and compiling a litany of them in the compromise. The result is a set of provisions that create far too much red tape. That is no good to consumers. Swamping consumers with information does not help them. It generates considerable additional costs, which have a disproportionately strong impact on small amounts of credit.

Accordingly, my aim from the outset was to try to streamline the rules and give national legislators more leeway. In this context I would like to thank my honourable colleagues, because all the votes in the Committee on the Internal Market and Consumer Protection went in that same direction, and all the decisions of this House seem set to do likewise.

Let me just cite two key examples, namely the substantial improvements and slimmed-down provisions regarding overdraft facilities and the emerging arrangement on Article 16 in respect of compensation for early repayment. In spite of these improvements, however, I believe that the emerging majority is only prepared to go halfway, no doubt partly influenced by the absence of consent in the Council and by the desire to bring the legislative project to a conclusion. I nevertheless consider it imperative that additional improvements be made if the proposal is to be judged favourably in its entirety.

I wish to mention two other points that are important to me and to seek your approval once more. Firstly, the threshold at which the directive starts to apply should be raised to EUR 500. I am well aware that the value of that amount varies throughout Europe. The point, however, is not that the directive should only apply once the EUR 500 threshold has been crossed but that national legislators should retain the option of applying their own provisions from the first euro rather than being bound to restrict their action to credit of 500 euros or more.

Secondly, consumers should have the option of waiving the prescribed explanations regarding pre-contractual information, one reason being that these explanations could hamper the internal market. I do believe it ought to be enough to provide the consumer with a copy of the terms of the contract in advance in order to satisfy the pre-contractual information requirement – which is, incidentally, what the Commission envisaged in its own proposal. That would limit the stacks of paperwork.

Unless these changes are made, I fear that the desirable aims underlying this directive, namely to open up the single market to consumers in Europe and give them a wider range of products and options, will not be achieved.

  Meglena Kuneva, Member of the Commission. − Mr President, the vote in this House on Wednesday on the Consumer Credit Directive is a very important moment for Europe’s 500 million consumers.

It will directly affect many people’s lives, and it is about two critically important issues. The first is about consumers being able to make better-informed choices when they take out credit loans: to pay for a family wedding, a washing machine or a new car – the things of life.

Second, it is about consumers getting more choice and a more competitive market. It is also a very important vote for businesses, creating a single, simple framework of rules so banks and other creditors can do business more easily across borders.

We need to seize this opportunity to move forward. It is clear that the status quo is not working. The figures speak for themselves. In Europe the average consumer credit interest rate varies from around 6% in Finland, the cheapest Member State, to over 12% in Portugal. In Italy, credit rates are about 9.4%, in Ireland about 6.8%.

Europe’s consumer credit market is fragmented, broken down into 27 ‘mini markets’. And, in a European credit market worth EUR 800 billion, direct cross-border financial services make up only a tiny fraction – 1% – of all distance credit transactions.

Clearly, the internal market is not functioning. Clearly, competition at EU level is not functioning. The result is that consumers are being denied choice and more competitive offers, and competitive businesses are being denied opportunities to access new markets.

The Consumer Credit Directive is necessary to start to break open the potential of the internal market and boost competition and choice. There are two main aims of the Consumer Credit Directive: to provide standards – comparable information – to consumers to make informed choices, and to give businesses a single set of standards to sell competitive credit offers across borders.

The Consumer Credit Directive focuses on transparency and consumer rights. I will highlight just a few of the important common elements it puts in place. Concerning advertising for credit loans: if there is a figure in an advertisement on credit, it will be mandatory to provide the same standard list of essential information all over the European Union.

Most importantly, for the first time, the annual percentage rate of charges will be calculated in the same way across the European Union. This is a very significant step forward, so that consumers can see the real cost of credit using one single figure.

Concerning pre-contractual information: information given to consumers for credit offers will be presented in the same standard credit information form across the EU, and it will give all the key facts and figures – from interest rates to information on charges and linked insurances. This will allow consumers to make a direct comparison between different offers presented in a standard, comparable way.

The Directive also sets out two essential rights for consumers. Once they have concluded the credit contract, consumers will be able to withdraw from the credit without having to give any reason and without any charge. This right, a new feature in almost half of the Member States, will apply to all consumer credits in the European Union.

In addition, the Consumer Credit Directive confirms the consumer’s right to switch, and this must be a very stable policy line – not only in this area. The right to switch with the right to repay early at any time: this is a critically important issue for the Commission, to ensure fair compensation to banks and at the same time to safeguard the consumer’s right to make a free choice and to proceed to a more competitive offer on the market. This is essential if competition is to thrive.

I fully recognise that harmonising legislation in this very sensitive area is not an easy task, but I am convinced that markets are made by people and should be made to work for people, and I believe that we in Europe are in the business of putting people at the centre of the market, giving people the power to chose, giving businesses the power to compete, and getting the European market to work for consumers.

I want to emphasise that, in the modern world, it is not about pitching consumers against business, but building healthy markets where consumers can choose and businesses can compete.

I believe that the amendments put forward by the PSE and the ALDE Groups – with which the Council has agreed – constitute a fair and reasonable compromise.

In my opinion, this is the best option in the interests of both consumers and financial services providers. I believe that the vote for this compromise package is a vote in favour of competitive markets, clear information and more informed consumer choice.

It is a modest beginning in the consumer dimension of financial services, where much needs to be done. So I look to the Members of this House: you are the ones to speak directly, on behalf of European citizens; you have fought, for so many years, for the things that really matter to people in their daily lives.

The task is to vote to support an agreement today on credit rules that will provide real added value to Europe’s citizens in that space where they lead their lives and to send a clear signal of Europe’s willingness to roll up our sleeves and work in an area that greatly concerns our citizens and businesses, large and small, today.

  Malcolm Harbour, on behalf of the PPE-DE Group. – Mr President, I wish to begin by acknowledging the huge amount of work done by the rapporteur for our group, Mr Lechner, and also to pay tribute to both the Commission and the Council for the work we have done together on what has been a difficult and sometimes controversial proposal, which, as the Commissioner has said, has gone on over a number of years.

At its core – and here I agree completely with the Commissioner – is an extremely important proposal for Europe’s consumers in the internal market. Consumer credit is a really important mechanism for bringing consumers into the market place. We want a thriving and innovative market; we want companies actively offering a wide range of products and services tailored to the need of consumers to buy specific articles, products or services.

But, above all, we want a well-regulated market in which consumers feel confident in accessing that market and knowing that they will have the information but also the safeguards of being able to see clear contract terms. It is quite clear in financial services that good regulation encourages market activity, and that is what we have been seeking throughout this process. However, the problem we have had with this Directive is the fact that the consumer credit market across the European Union is at very different stages of development: many countries, like my own, already have well-developed regulation. The original idea of a maximum harmonisation would have meant that consumers in those countries would have been disadvantaged, and it has been trying to get that balance right that has occupied us.

I just want to correct one impression that I think Ms Kuneva gave, perhaps unintentionally: the package of compromise amendments on the table is supported with one exception only by this group. We have tabled the same amendments; it is a consensual position across Parliament. I think there is one aspect that we are still arguing about, but I am sure we will get there and then we will have a good and important package. However, the important thing is that we keep monitoring the evolution of this market, ensure that it develops in a responsible way and deal with some of the problems that might arise from the evolution and development of that market. I am confident that this House will rise to its responsibilities and we will come up with a good package tomorrow.

  Arlene McCarthy, on behalf of the PSE Group. – Mr President, the Committee on the Internal Market and Consumer Protection, and previously the Committee on Legal Affairs, have always recognised the potential benefits, to both businesses and consumers, of developing an internal market and consumer credit. I was present during the gestation of this legislation and hope to be there tomorrow for the final delivery, as it were, of the new consumer credit baby!

The last five years of discussion and debate have demonstrated fundamental differences between the Commission and Parliament, and more specifically between the Member States, on the best way to achieve this, and I firmly believe there are lessons to be learned from that. All proposals – even a modified Commission proposal – have to undergo a rigorous impact assessment to enable all parties and stakeholders to evaluate the merits of the proposals and to engender consumer confidence and business confidence.

It is regrettable that neither the Commission nor the Council was prepared to do this at the time. However, our job today is to address the new text, which is a vast improvement on the original proposal. It focuses on the essential elements and components for starting to open the market and for protecting the consumer. Its benefits include enabling consumers to compare offers of credit, obliging lenders to assess the credit-worthiness of the consumer – which will be important in the fight against debt across the EU – and obliging lenders to provide explanations and, as a result of our amendments, all creditors will now be responsible for providing comprehensive and standard information in a simplified format.

I welcome the 14-day withdrawal right and the right to early repayment, which are good elements for engendering consumer confidence and encouraging them to look beyond their home market for credit offers. This is not just about opening the market, and the fact that we now have free movement of labour and people across 27 EU Member States gives this law new significance. For example, a Polish plumber working in France or Germany and borrowing from a credit institution there can now obviously compare the different offers on APR in the knowledge that he has the standard information enabling him to take the right decision.

Finally, I welcome the fact that the Commission, by exempting credit unions from this law, is not strangling small Community providers with red tape. I also welcome the Member State flexibility there is now. This has, for example, enabled a high level of protection to be maintained for consumers in the UK, which will now retain the right to joint and several liability for credit cards. There is therefore enough flexibility in this proposal to make it work, and I would urge Members to lend it their support.

As chair of the Committee, I think that our work does not finish here ...

(The President cut off the speaker)

  Diana Wallis, on behalf of the ALDE Group. – Mr President, this is normally the time of year we all wish one another a ‘Happy New Year’. However, in the UK, and globally, the news this new year has been dominated by worries over the economy, and particularly over consumer credit. It is not just a question of normal post-Christmas depression; we all know that it goes much deeper than that. Credit is going to be a difficult issue for the foreseeable future, for both lenders and borrowers alike.

As legislators confronted with that global backdrop, we need to do something. We need to stimulate the EU’s market in financial services, while on the other hand ensuring that our consumers make sensible and informed choices, and that all the information and the comparators are available to them in order to do so. Many of us in this House, and particularly in the Committee on the Internal Market and Consumer Affairs, have spent the last couple of years sitting on an enquiry by Parliament into the demise of the British insurer, Equitable Life. We know what the consequences are for consumers, in the context of financial services, if we get the cross-border regulatory regime wrong. In this instance we need such a regime and we need to get it right, particularly in view of the global circumstances we are facing.

This directive can help. It can help Europe’s market in financial services at a difficult time, and it can empower and assist our consumers in obtaining credit and doing so competitively. My group has signed up to and put forward, with the PSE, a package that we hope will be agreed. It seems to us that, at the end of the day, we are faced with an argument that is almost about one word, in one article, after seven years of negotiating and drafting. It would be a pretty poor affair for this House and for Europe’s institutions if we cannot overcome that and deliver this directive, which will, hopefully, bring to the European market all the benefits we have heard outlined.

  Eoin Ryan, on behalf of the UEN Group. – I support the need to update EU legislation in this area. The last time we had a directive on this was in 1987, and certainly the consumer credit market has changed dramatically since then.

This EU Directive on Consumer Credit Loans seeks to introduce a greater level of competition into the EUR 800 billion consumer credit market. It will bring legal certainty to consumers, which is absolutely vital if people are to shop around and look for the best product which suits their needs. It will also help business to compete. When you look at the differences in consumer credit rates around Europe – from 6% in some countries up to 12% in others – it surely is time that the consumer got a better choice.

These new rules will make the market more transparent for consumers and business competitors alike. The main effect of this Directive will be to provide comparable and standard information to consumers across the EU who take out loans. For credit offers, the information given to consumers, whether it is interest rates, numbers and frequency of payments, must be set out in a new EU-wide European credit information form.

So I very much welcome this. I think that it is vital for consumers that they have confidence and that there is legal certainty in this area, but I believe that this will bring greater competition in this area and will, at the end of the day – as has already been pointed out – give more choice to consumers, and that the consumers will benefit greatly from this Directive.

  Heide Rühle, on behalf of the Verts/ALE Group. – (DE) Mr President, Commissioner, ladies and gentlemen, we must regrettably adopt a directive tomorrow which does not meet our own criterion of better regulation. There has been no impact assessment, even though this is an entirely new proposal, in spite of the intervening enlargement of the EU with the accession of 12 new Member States, in spite of major differences between Member States in financing practices and regulatory systems and in spite of social disparities within Member States.

Instead of complete harmonisation, there was an urgent need to give the Member States greater freedom of action. The Member States can respond quite differently and far more quickly today to the various new models that appear on the market on a daily basis. The Member States are also better equipped to respond to a financial crisis. They can regulate matters in a shorter time frame than it takes the European Union to act.

This is why it would have been wise to confine ourselves here to minimal harmonisation instead of trying to harmonise as much as possible. That is the criticism we have to make of this consumers’ directive. Moreover, we also deplore the fact that numerous opt-out clauses have had to be adopted in order to get all the Member States on board. This, unfortunately, has done nothing at all for the rigour of the provisions.

There is also, however, one exemption for which we would argue, and it relates to renovation loans. In view of the formidable challenges posed by climate change, there is an urgent need to exempt from this proposal renovation loans secured by mortgage, which have nothing to do with consumer credit but should be treated as mortgage loans.

  Eva-Britt Svensson, on behalf of the GUE/NGL Group. – (SV) Mr President, when rules are laid down as to how an agreement between two parties is to be drafted, account must of course be taken of whether the parties have equal status or whether one party has an advantage over the other from the outset. If one party has an advantage, this must be taken into account in the way the agreement is drafted and a formula must be devised which strengthens the weaker party.

When it is a case of consumer credit, which is what we are discussing now, it is the person needing credit who is in the less favourable position. Unfortunately neither the rapporteur nor the compromise proposal take sufficient account of this responsibility, of consumers’ rights and consumer protection. This is particularly serious since it is invariably those with the least financial resources who seek purchase credit.

I also want to say that, despite the fact that we have a decision requiring gender mainstreaming in all our work here in Parliament, no gender analysis of this directive has been carried out, also despite the fact that we know that many women on the lowest wages are precisely those who often get caught in the debt trap. I maintain that there must be a ceiling on the level of compensation to be paid in the event of the early repayment of loans. I also maintain that a three-day cooling-off period is far too short. Besides, I want minimum harmonisation, not maximum harmonisation.

  Godfrey Bloom, on behalf of the IND/DEM Group. – Mr President, I wonder if I might perhaps offer a few words of wisdom here. I have spent most of my life in merchant banking, albeit not retail banking, and I have to say I do not regard it as the business of politicians to come between a consumer, or a lender, and a borrower. I would not dream of trying to regulate on this subject, with all my experience. I look down the list of people who actually serve on this committee and in this Parliament and I do not see a great deal of experience there, so it is a question of the blind leading the blind. I think that this place, which has not managed to audit its own books for nearly 11 years, commenting on this is slightly absurd.

The fact that you can actually have rules for Bucharest, London and Paris and consumers in those places is absolutely ludicrous. Perhaps I could warn people like the UK Government that bailing out banks to the tune of 50% of their entire reserves is fundamentally wrong.

So, if I may, let me give one tip to the consumer: ‘never a lender or a borrower be’, and to governments, let me say: ‘a fool and his money are soon parted’!

  Andreas Schwab (PPE-DE). – (DE) Mr President, ladies and gentlemen, let me begin by thanking the rapporteur and, of course, the Commissioner too, who has played a highly constructive role in this complex matter.

Mrs Wallis referred to the fact that this dossier has been what I like to call haunting the corridors of the European Parliament and the other European institutions for more than seven years, and in my opinion these have not been seven years of transparent legislating or seven years of better regulation but a muddle that very few Members of this House have yet managed to untangle.

In this respect I do not believe we have done any great favours to the European consumers and citizens who have had to watch this backstage wrangling among the Member States, but if this final outcome provides greater transparency for consumers who wish to buy a car, for example, enabling them to make an informed choice between a hire-purchase agreement and a personal loan, I believe it will be useful.

Reference was made here to the fact that the European credit market is worth EUR 800 billion and that the differential between the highest and the lowest interest rates is about 6%. There is, of course, a lot of mileage in this, and it is to be hoped that consumers will be able to benefit from the available scope too, but I have good reason to be sceptical. The fact is that a consumer who wants to buy a digital camera for EUR 220 and then has to complete a ten-page credit form in writing will scarcely be able to comprehend all the risks involved in a credit transaction for EUR 220.

The result, in my view, is that much of what is meant well in this package will not ultimately help the average vulnerable consumer but will create such difficulties for consumers that they will even prefer not to buy anything on credit terms to avoid the daunting task of completing the extensive set of forms. That remains my view, and I hope that the variations in interest rates will become more transparent for consumers and that this will be of benefit, although I still believe that the preceding process has been unacceptable.

  Evelyne Gebhardt (PSE). – (DE) Mr President, Commissioner, I believe we must see this through so that consumers and banks know what will and will not apply to them in future.

I believe the compromise which we developed last week and which the Liberals have now endorsed too is a thoroughly reasonable one and that we have come up with a common solution which is tenable and consumer-friendly. That is the main thing.

If I may take issue with Mr Schwab, first of all the form is not ten pages long, and secondly I consider it a very good thing that we have a common form in which the consumer must be told clearly and transparently the total amount of the credit, the term of the agreement, the rules governing the right of withdrawal and the applicable annual percentage rate, which might then be calculated on the same common basis in all Member States. That is transparency, and this transparency is what we need and what is at stake in tomorrow’s vote on the proposal contained in amendment 46. I hope we can ensure that transparency really does win the day.

Forgive my saying so, but while the rapporteur has unquestionably worked hard, my group cannot condone this Parliament of ours being railroaded into a situation in which the Council suddenly appears to be consumer-friendlier than the European Parliament. My group regards this purely and simply as an unacceptable state of affairs, which is why we must ensure that a fair balance is struck between the natural right of the banks to do business – a normal feature of any market economy – and the need to protect consumers by ensuring that they are given the information they need to choose the right form of credit and reject unfavourable options. That is the way to go, and that is what we should adopt tomorrow.

  Toine Manders (ALDE). – (NL) Mr President, I should first like to thank Mr Lechner for his drafting and his constructive cooperation. I should also like to thank the Commissioner and the Council, because it was a lengthy trialogue. Unfortunately we were not able to reach a compromise, but we were only a hairsbreadth away from one, so I am pleased that on Wednesday morning we shall be voting on that same compromise and I am assuming we shall achieve it.

Why? We have in fact been talking about it for seven years already. If we want to have any political credibility with the market and our citizens, with consumers but also with the sector and the industry. it is important for us to take a decision at last. A compromise is always give and take and of course there are aspects that could be improved, but that applies to all parties. The fact is that a compromise is mixing water with wine and then you get a result and you have to be satisfied with it.

I believe that the present plan is in the interests of both consumers and the financial sector. That is what we have to work towards, that is in the interests of Europe and the internal market.

  Małgorzata Handzlik (PPE-DE). – (PL) Mr President, Commissioner, first of all I would like to congratulate the rapporteur on his excellent work, which no doubt required considerable patience, but has doubtless brought him considerable satisfaction. This report can certainly be counted as being one of the most controversial and most difficult compromises. Its objective is to bring more closely together different regulations in various EU countries, which really are very different, and legislation in this area is largely under the control of Member States.

Harmonisation in this sector is quite simply impossible. We can only try to introduce a partial convergence of requirements, and even this, as we have seen over the past months, has caused considerable problems. I agree with the approach taken by the rapporteur, that in an area as difficult as this Member States should be given as free a hand as possible. This seems to be the only sensible solution to enable such a difficult and weighty report to be accepted by all interested parties.

It would appear that, in its present form, the text has been simplified. What can be seen in all the work over this report is the lack of an analysis of impacts, and such an analysis would certainly have improved its quality. Overall, this draft seems to me to be satisfactory. Obviously this version is far from being ideal, but it has been adapted to the current situation in Member States. This proposal will abolish financial and administrative burdens on consumers and will, in my opinion, introduce important provisions to protect the consumer, making it easier to obtain credit. One of the most useful proposals is the introduction of comparisons.

  Mia De Vits (PSE). – (NL) Mr President, ladies and gentlemen, I personally cannot share the enthusiasm for this text. Important steps have been taken, but this text does not serve the purpose, which is to create a harmonised framework. That harmonised framework has not been achieved on a number of points that we consider essential.

Let me explain. There are two points that, as far as our delegation is concerned, are still difficult or very difficult. The pre-contractual information package is reinforced and harmonised. That is good. But it is undermined by the various formulae that are allowed for the annual percentage rate of charge for opening credit. I just need an explanation of how consumers are going to be able to compare those various formulae objectively.

Secondly, in the case of my country, Belgium, the position of consumers is likely to be weakened, in that the database has to be consulted but there are no related sanctions for the banks. That could plunge people even further into debt. I also think it is a missed opportunity for the banks themselves. It is still a wasted regulation.

  Wolf Klinz (ALDE). – (DE) Mr President, Commissioner, ladies and gentlemen, I welcome the Commission’s well-intentioned attempt to establish a functioning internal market with enhanced consumer rights in the realm of consumer credit. The result of its efforts, however, must honour the pledge made to consumers by offering them a wider choice, better terms and conditions in the wake of increasing competition and less red tape. Judged by that standard, the final draft directive on consumer credit is unsatisfactory in many respects.

Firstly, the prescribed standard information, which runs to some eight pages, is too extensive. I doubt whether customers will actually use it to inform themselves of the detailed terms and conditions. In practice, this is a tangible increase in red tape, for which consumers will have to pay at the end of the day.

Secondly, the provisions on early credit repayment squander the opportunity to let consumers share in any windfall that might accrue to the creditor because of a favourable change in interest rates after the lending date.

Thirdly, the compromise that has been reached will effectively put an end to overdraft facilities, which are standard practice in Germany and widely used elsewhere. The public will deeply regret this and will have one more reason to gripe about the Brussels Moloch. What counts is quality, not quantity.

  Zita Pleštinská (PPE-DE). – (SK) I would like to thank the rapporteur, Kurt Lechner, for the exacting work he did when drawing up this report. He managed to simplify the Council’s overcomplicated and bureaucratic proposal through new amendments.

I would like to take the opportunity presented by the presence of Commissioner Kuneva at this discussion, which is important to European consumers, to draw attention once again to the important role of consumer organisations, which must be able to play their rightful role in every Member State and receive adequate support from the Commission. To improve the quality of consumer protection, the individual consumer bodies require additional finance to be able to educate consumers and provide independent advice on consumer credit, notably to the most vulnerable consumer groups.

Commissioner, although you have achieved much encouraging progress for consumer groups and although your arrival gave the green light to consumer protection, I would ask for your help again in 2008.

  Margarita Starkevičiūtė (ALDE). – (LT) I welcome the appearance of this directive; it is a step in the right direction. However, I would like to draw your attention – in particular the Commissioner’s attention – to Article 16. In my country, consumers do not receive any compensation if they repay credit early. Now, when this article comes into force, consumers will actually pay more. I find it hard to believe that this denotes consumer protection. Surely, it is said that there are plenty of legal protectors in the article intended to ensure that consumers do not have to pay for this, but when we talk about legal protectors we mean legal games and not the real economy. In the real economy, if it is possible to tax a consumer, he or she will always be taxed. Therefore, I ask you to take care to structure Article 16 better in view of the fact that in many countries this tax is not applied at all.

  Piia-Noora Kauppi (PPE-DE). – Mr President, I think we have managed to get quite a good result in the recent negotiations. What we have not managed to improve is simplicity. I think that now there is far too much information for an ordinary consumer in Europe. Whenever the Council members and Member States request more derogations from the standard information, it makes this whole directive more complex.

I think that standard information really should be standard. It should be an EU level playing field. Every time that we in Parliament or Member States in the Council say that we should have different adaptive rules by the Member States we make this issue more complex.

I totally agree with the Commission’s objective. Probably the compromise negotiations are headed in the right direction, but something should be done about the simplicity issue before this directive gets into the books and reaches consumers.

  Jean-Paul Gauzès (PPE-DE). – (FR) Mr President, colleagues, Commissioner, I should like to make just a few observations.

I think it is good for our Parliament’s image to show European consumers that we have the protection of their interests in hand. Mr Lechner’s report certainly reflects a tremendous amount of work, on which I congratulate him, but I think that the task now, in the final stage of the process, is to strike a compromise that will enable us to demonstrate the importance that we as parliamentarians ascribe to the consumer. It would be rather hard to swallow if the Council were portrayed at the end of the day as the consumer’s best defender.

We need to find a compromise over the few words that divide us, in order to avoid a conciliation procedure which, I believe, would be in no-one’s interest. We also need to avoid taking retrograde steps, and the fact is that consumers in France, like those in Lithuania, are not financially penalised for early repayment. We cannot present consumers with a situation less advantageous than that which they currently enjoy under national legislation.

  President. − If there are no other speakers, let me remind Members that they may use the ‘catch the eye’ procedure to ask for the floor again if they believe they did not complete their first statement.

  Meglena Kuneva, Member of the Commission. − Mr President, I would also like to express my sincere thanks to the rapporteur, Mr Lechner, and to all Honourable Members for raising a lot of important and wise remarks.

Let me just comment on a few of them. We believe that the threshold is set up very carefully. Our common aim is not to deprive vulnerable consumers of protection by directive. That is why we set up a threshold which equally embedded the interests of the new countries and which does not exclude most average credits in the EU-12.

It is also, we believe, a big advantage to have a standard info-sheet, which many of you have pointed out as one of the main positive steps in the directive. This will be one of the biggest advantages and we will not deprive the consumers if we substitute it for the contract copy, because consumers cannot easily compare copies of the contract. They often have difficulties understanding the contract copies – and this is borne out by Eurobarometer research.

As to full harmonisation – actually I would like to stress that this is ‘targeted’ full harmonisation. The reason why it is better than minimum harmonisation, as some of you proposed to discuss even today, is that we think that it is necessary to lower market-entry barriers for financial services providers, and this is one of the main reasons why this proposal for a directive is going ahead. Through this, we need to increase consumer confidence. That is why targeted full harmonisation is the best way to do it.

The Commission would like to reassure Mr Harbour especially that it will monitor the market. My services have launched a study to collect indicators and data on the present market. A few years later we will use the same indicators and collect the same data. This will allow us to decide on the follow-up.

To conclude, I can only repeat that in my view, going through the conciliation procedure would not help us reach a better compromise than the one you have on the table today. Consequently, I very much hope that Parliament will be able to adopt this text at second reading tomorrow.

  Kurt Lechner, rapporteur. – (DE) Mr President, Commissioner, ladies and gentlemen, it has emerged clearly in the debate that we have a common aim. In particular, I can unreservedly endorse what the Commissioner said in her introductory remarks. The only question is whether the draft that is now on the table can actually achieve our common objectives. I believe there are a number of defensible opinions on this issue.

The uniform annual percentage rate of charges certainly represents unmitigated progress, as does the common uniform right of withdrawal. Let me re-emphasise, however, that consumer protection is best served if we consider the whole picture, as the Commissioner rightly indicated, rather than tacking together all the provisions that apply anywhere in Europe. More statutory provisions do not mean greater protection of consumers.

On the subject of interest-rate differentials in Europe, I must point out that I should have welcomed the presentation of an analysis of the extent to which these differentials might be due to divergent legal provisions and complexities in particular countries and whether it might be the case that interest rates are lower where legal rules are simpler. I do not know the answer, but the question ought to have been examined. Competition and general consumer education also serve to enhance consumer protection, but excessively convoluted rules do not.

Let me say a brief word on the trialogue. I certainly held the view that we should thrash out our differences here in Parliament. Far be it from me to thwart an agreement. Nevertheless, since we always argue for transparency, particularly in the Council but in other forums too, I do not think it right that an informal body should hold these discussions behind closed doors. Instead, each institution should initially express its opinion, motions should be tabled, and a solution should then be found on that basis.

Let me repeat once again that the draft has been considerably improved in the course of more than six years of deliberations – I want to make that abundantly clear – and Parliament has played a crucial part in the improvement process. I also see this to some extent as an endorsement of my own work. In my opinion, however, the draft is simply not good enough. Be that as it may, it will enter into force. I have no hesitation in thanking my fellow Members, the Commission and indeed the Council – which, in point of fact, has always provided very straight answers and detailed information – for their contribution to the performance of what has generally been a thoroughly gratifying and pleasant task.

  President. − The debate is closed.

The vote will take place on Wednesday, 16 January 2008, at 12 noon.

Written statements (Rule 142)

  Lasse Lehtinen (PSE), in writing. – Parliament’s vote on this very important dossier means are now one step closer to fully implementing the four freedoms. This directive will bring more rights and transparency to consumers when taking a consumer credit. Comparing credit conditions across borders and choosing the best offer will now become much easier than before. After five years of preparations, the directive will apply to all unsecured loans between EUR 200 and EUR 75 000. I want to point out that it is important to set the lower threshold at EUR 200, since loans do not often exceed EUR 500, especially in the new Member States.

The consumer will benefit not least from all contractual information, a common method for the calculation of the annual percentage rate and a 14 day withdrawal period.

Balanced laws like this help us to achieve the approval of the citizens for the European Union.

  Mairead McGuinness (PPE-DE), in writing. – An EU directive on consumer credit has been talked about for some time, so today’s debate on the directive is to be welcomed. There is great hope that the directive will lead to consumers looking beyond their own national boundaries for loans – allowing them to shop around for the cheapest loan available.

It should, when implemented and taken up by EU citizens, lead to people availing of cheaper credit.

But this is the key to its success: firstly knowledge among EU citizens of the possibility of availing of loans across borders, and secondly a willingness of citizens to take up this option.

At present, it is clear that there is a reluctance among citizens to shop around within their own Member State for best value in loans, just as there is still some resistance among consumers to change banking institutions, though that may be changing slowly.

The success or otherwise of this directive depends on its effective implementation by Member States. Only time will tell if it lives up to our expectations and provides greater choice to consumers, greater availability of consumer loans and most importantly lower costs on such loans.

  Alexander Stubb (PPE-DE), in writing. – Consumer credits are an essential pillar of the internal market.

First of all, I think this directive is a first step and a good example of how the EU delivers concrete results, even in such a controversial issue.

Second, in my opinion in the longer term further harmonisation is needed once we have gathered experience on the working of this directive so as to make it easier for consumers to shop across borders and to give full legal certainty to businesses on their obligations when offering these credits in other Member States.

Third, I want to thank all the people involved for their perseverance in this process, which has lasted for years.

(The sitting was suspended until the vote at 11.15 a.m. and resumed at 11.30 a.m.)

IN THE CHAIR: ALEJO VIDAL-QUADRAS
Vice-President