Friday January 11, 11:57 AM
EU parliament vote on consumer credit to see clash over early repayment of loans
BRUSSELS (Thomson Financial) - The European Parliament will vote on Wednesday on the consumer credit directive, which is designed to improve transparency in the retail loan and credit market and give consumers more rights and flexibility, although charges for early repayment remain a hotly contested issue.
'It's a directive that's been in the pipeline for far too long,' said a spokeswoman for EU consumer affairs commissioner Meglana Kuneva, adding that after five or six years, 'the vote in parliament should hopefully seal a deal and give consumers the right to this basic information they need'.
She said that shopping for credit in different EU member states is like 'like comparing apples and pears' and that the directive would harmonise the way interest rates, taxes, charges, linked insurances, repayments, and charges for defaulting are displayed.
She added that one contentious issue remained going into the debate on Tuesday: the consumers' right to switch -- effectively a right to repay early.
'The issue at stake is the repayment to the bank when a consumer decides to switch,' she said, adding that the commission's position is that this should not be 'punitive'.
'The fee paid back to the bank, irrespective of what the legal wording is, (should not be) punitive,' she said.
'It shouldn't be possible for the bank to put a punitive amount in place to prevent consumers from switching (their credit provider),' she said.
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