Connect with us

Hi, what are you looking for?

Stock

EU Commission wants tougher rules for consumer credit deals

Stock Markets1 hour ago (Jun 30, 2021 09:11AM ET)

(C) Reuters. FILE PHOTO: European Commission vice-president in charge for Values and Transparency Vera Jourova gives a press conference during a General Affairs Council in Luxembourg, June 22, 2021. John Thys/Pool via REUTERS

By Foo Yun Chee

BRUSSELS (Reuters) -The European Commission on Wednesday proposed caps on interest rates for consumer credit agreements and a ban on bundling practices as part of tougher consumer credit rules following the surge in online shopping during COVID-19 lockdowns and the rise of digital lenders.

Existing rules known as the General Product Safety Directive came into force in 2001 while rules on consumer credit to safeguard consumers date from 2008.

The EU executive said 70% of consumers shopped online last year, with new technology products making up the bulk of their purchases.

“We are making it easier for consumers to avoid risks related to having a credit and we are putting even stronger rules for product safety in place,” Commission Vice President Vera Jourova said in a statement.

“It will also put more responsibility on market players and make it more difficult for bad actors to hide behind complicated legal jargon,” she said.

The proposal also includes caps on the total cost of credit and the annual percentage rate of charge, rules on tacitly accepted overdrafts and an obligation by the creditor or the provider of crowdfunding credit services to assess the creditworthiness of the consumer.

The Commission wants information related to credits to be presented in a clear way in the Consumer Credit Directive and adapted to digital devices to ensure that consumers understand what they are signing up for.

EU countries will be asked to promote financial education and to ensure debt advice is made available. The proposals will need to be thrashed out with EU countries and the European Parliament before they can come into force.

Some EU lawmakers however demanded more in order to tackle over-indebtedness and high interest rates.

“It is important to us that the range of loans covered by the directive is expanded. We want to limit fees and interest rates, strengthen consumers’ information rights and prohibit manipulative advertising of credit offers,” Green lawmaker Rasmus Andresen said.

Another Green lawmaker, Sven Giegold, lambasted the shortcomings in the proposal, saying it fails to recognise that people in financial or personal emergency situations are often not free to make their own decisions.

“Many business models deliberately exploit the distress of these people and create dependencies, especially through over-indebtedness. Providers should be subject to responsible lending requirements,” he said.

Consumer group BEUC however welcomed the proposals, saying the Commission had accepted many of its suggestions.

EU Commission wants tougher rules for consumer credit deals

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Stock

Stock Markets25 minutes ago (Jul 16, 2021 05:46PM ET) (C) Reuters. FILE PHOTO: Johnson & Johnson’s Neutrogena Cool Dry Sport sunscreen, which is part...

Tech

Builders, creators and developers, this one’s for you! TechCrunch has always been about discovering fresh solutions and shining the light on exciting, new products...

Disclaimer: Wisegazette.com it's managers and its employees (collectively "The Company") do not make any guarantee or warranty about what is advertised or above. Information provided by this website is for research purposes only and should not be considered as personalized financial or health advice. Copyright © 2021 Wise Gazette. All Rights Reserved