Proposals for a new directive on consumer credit were adopted by the European Commission in Brussels on September 11.
Essentially, the changes to EU-wide credit legislation, which has been in force since 1987, are intended to lead to improved transparency on finance products in respect of costs, terms and conditions. According to the EU, lenders will find it easier to assess borrower risk, but in return they will be subject to “know thy client” obligations before granting any credit.
Graham Prestedge, sales director for First National Motor Finance, believes the proposed changes are complex and risk bogging down dealer sales staff in extra bureaucracy.
“This piece of legislation will make block exemption look like Julie Andrews playing Mary Poppins,” he told the 148 delegates to the FNMF sponsored AM British International Motor Show breakfast business briefing at the NEC, Birmingham.
“Block exemption was just the start of a whole raft of consumer legislation dealers will have to deal with over the next couple of years.” According to EU health and consumer protection commissioner David Byrne, revisions to the rules are long overdue, adding that Eurozone consumers owe £320bn on tick.
“It's been my ambition to make sure their interests are well protected within a framework that acknowledges the importance of credit for our modern lifestyles,” he says.
“Harmonised consumer credit rules throughout the Union will not only increase the protection of consumers across borders but also their confidence, and strengthen the functioning and stability of the consumer credit market in the EU.
As part of the revisions, consumers will have the right of withdrawal within 14 days, free of charge and without having to provide justification.