The Farce Known As The European Consumer Credit Directive

Tuesday, 8. March 2011

A few weeks ago I had a bet with an old friend of mine over one of the critical sectors that I believed had been omitted from the new EU Consumer Credit Directive (CCD) which came fully into force from 1^st February. The question was over Hire Purchase. I knew that the sister product, known as Conditional Sale, was included but it was my understanding that Hire Purchase was excluded and was therefore simply controlled, as it always has been, by our existing Consumer Credit Act. Confused? It gets better and remember the purpose of the CCD is to offer consumers greater protection. After much debate and a call to someone in the know, it was decided that I was wrong and HP was included in the CCD. I then received an alert regarding a detailed summary of the CCD issued on the 22^nd February by Law Firm, Wragg & Co who are a recognised expert law firm in the area of Vehicle Finance.

Quite clearly they list what are known as ‘Out Of Scope’ agreements, these are agreements covered by the Consumer Credit Act but are outside the scope of the CCA. On this list appears Hire Purchase Agreements. So am I right or am I wrong? I believe that I’m right but the argument continues. The idea of entering into some sort of purchase arrangement when changing your car is daunting enough but it just got worse.

You will need to be given an ‘Adequate Explanation’ by the person supplying you with the credit but it seems each lender has interpreted the law differently so as a consumer I would suggest you stand absolutely no chance. I’m an expert in this field and I’ve seen numerous changes in the law over the years but I have to say this has been the most ridiculous farce I’ve ever experienced. The law is so vague that at a presentation I attended recently the presenter said that the only way we are going to get a proper interpretation of the new regulations is when cases start going to court! What a bloody mess, I would stick with contract hire and use an expert broker if I were you! By Graham Hill