Before consumers enter into a loan, they need to understand its real cost and take the time to reflect, especially on the monthly repayment. Following a crackdown on websites offering consumer credits, more than 3 out of 4 sites checked a year ago now comply with EU law (compared with only 30% in September 2011). Further improvements should follow as national authorities pursue their actions on outstanding cases. Of the 70% of sites flagged for further investigation at the time, 10% were finally deemed compliant and 35% were corrected after action by national authorities. The remaining websites either no longer exist or are subject to on-going administrative or court proceedings.
A “sweep” is an exercise to enforce EU law. It is led by the EU and carried out by national enforcement authorities who conduct simultaneous, coordinated checks for breaches in consumer law in a particular sector. The national enforcement authorities then contact operators about suspected irregularities and ask them to take corrective action. The Consumer Credit sweep took place in September 2011. In this EU co-ordinated “Sweep” investigation, which took place in September 2011, national enforcement authorities checked 565 websites across the 27 Member States, Norway and Iceland.
The market under scrutiny is used by consumers every day. In 2010, financial institutions in the eurozone had more than €600 billion outstanding consumer credit.1
The Consumer Credit Directive lists the information that needs to be given in the advertising of credits and in credit offers. It also provides for a 14 days reflection time, during which the consumer may withdraw from the agreement without charge.
Out of the 565 websites checked in 2011, 30% of them passed the test for compliance with the applicable EU consumer rules while 70% of these sites (393) were flagged for further investigation. A year later, 57 additional sites were finally considered to be compliant, 18 websites no longer exist, 194 websites were corrected following action by the national authorities and 124 websites are still the subject of administrative or legal proceedings in the countries concerned.
The main problems detected in this sweep were:
Missing information in consumer credit advertising (e.g. on the annual percentage rate of charge (APR): 258 sites were failing to display all the standard information required by the Consumer Credit Directive.
Omission of key information on the offer and/or misleading presentation of the costs (e.g. type of interest rate (fixed, variable or both), duration of the credit): 244 sites failed to give clear information about all the different elements of the total cost. Here to read more.