By Duncan Lumsden and Anna McLauchlin - 17th March 2004
MEPs have backed a 'light touch' look to new EU laws on consumer rights when borrowing money.
An original 'maximum harmonisation' proposal on consumer credit from the European Commission saw many key elements stripped in the European Parliament's legal affairs committee vote on Tuesday.
A day later, MEPs, the credit industry and consumer groups were still digesting the hundreds of changes to the blueprint that emerged from the two and a half hour amendment spree.
An initial reaction from EU consumer group BEUC was to express the discontent at the perceived watering-down. "We can say at this stage that the vote has weakened consumer protection" said a spokesman.
But those steering the package through parliament were unrepentant.
MEP Joachim Wuermeling's office, responsible for drafting the parliament's position, claimed the commission's proposal was variously "impossible" or at best "costly" to implement, and said the original plans painted a patronising picture of consumers not being able to choose for themselves.
"Others have the view that the consumer is stupid. That is not our view," said an advisor to Wuermeling. Rather than nannying, the consumer needed to be "protected from criminal actions, and have access to information."
The commission's 'one-size fits all' approach had been "clearly abandoned", in light of the vast variety of lending laws and consumer protection provisions already in place across the EU. Instead MEPs opted for 'common minimum standards'.
Commission ambitions to cover doorstep-selling, credit 'intermediaries' like brokers, mortgages, and even overdraughts have also been thwarted.
As have original plans to have the new laws apply retroactively to all existing credits.
Had the proposal remained intact, said the Wuermeling aide, it would have meant bank managers across Europe sending out "hundreds of millions of new overdraught contracts, costing billions of euros", just to toe the EU line.
And MEPs threw out what they felt were self-defeating aims to apply 'mutual recognition' on credits. Lending practices were too disparate from one country to another to allow consumers the assumption that borrowing money abroad was tantamount to borrowing at home.
New to the proposals as a result of the vote will be an 'infobox' giving creditors comparable 'at a glance' information on APR interest rates across the EU.
Further MEP attempts to add changes are expected for the proposal's vote in full EP plenary, but one close observer of the consumer credit issue prophesied "it looks like it could go through smoothly."
Both MEPs and EU governments must back the proposal if it is to become law.
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