Why The EU Consumer Credit Directive Is Pathetic!

Wednesday, 23. February 2011

It’s been a busy week this week, I attended a round table discussion hosted by Motor Finance, the journal of the industry and one for which I have written a regular column for many years. This was followed by the annual dinner of the Finance and Leasing Association (FLA), attended by 1400 guests, all movers and shakers in the finance and leasing industry. Recession – what recession? Anyway, going back to the round table, one of the main items on the agenda was the new EU Consumer Credit Directive (CCD). Whilst those in attendance were trying to find nice things to say about it my view was completely different. Whichever way you want to cut it the whole thing has been a farce and we now have virtually every finance company interpreting the poorly constructed rules differently. I raised the point that the introduction of the EU Consumer Credit Directive was to harmonise finance for consumers and small businesses across Europe and more importantly for life to be made easier for the consumer and small business when deciding upon finance. It is a blunder of the highest magnitude and I made sure that all attendees knew my feelings on the matter.

The UK Government has had nearly a year to bring UK legislation into line, known as the transition period, after which the CCD became fully effective (February 2011) but right up to the last minute new legislation was being pushed through to the point where, in my opinion, no one has a real clue as to the final effects of the legislation. It’s a complete dog’s dinner and for consumers who struggle to understand the meaning of APR they stand no chance whatsoever. Things such as cooling off periods, linked transactions, conditional sale agreements just add to the total confusion. Link the CCD with the distance selling rules, with the right to cancel and existing Consumer Credit legislation it’s a nightmare and stretches even me to the limit and I’ve been in the industry for over 25 years and am an accountant! Watch this space but don’t hold your breath waiting for the final direction from the Government or the controlling bodies, if you do you will die! By Graham Hill