Yesterday, on the 10th of January 2012 the European Commission published the results of an EU-wide investigation of websites offering consumer credit. The key question was whether consumers are receiving the information to which they are entitled under EU consumer law before signing a consumer credit contract.
The investigation was conducted by the EU Member States national enforcement authorities. In total they checked more than 562 websites across the 27 Member States plus Norway and Iceland. The result was that 393 (70 percent) of the sites were flagged for further investigation. In Germany even 77 percent of the websites (20 out of 26) were seen as being inadequate. The national authorities will now contact financial institutions and credit intermediaries about the suspected irregularities and ask them to clarify or take corrective action.
The following key problems were identified:
- Missing information in consumer credit advertising: advertising on 258 (46% of websites checked) did not include all the standard information required by the Consumer Credit Directive, e.g. i) the annual percentage rate of charge (APR), which is essential to compare offers, ii) information on whether charges on obligatory ancillary services (e.g. insurance) were included in the total cost, or iii) on the duration of the credit agreement;
- Omission of key information on the offer: 244 (43%) websites did not give clear information about all the different elements of the total cost, e.g. i) on the type of interest rate, (fixed, variable or both), ii) on the duration of the credit (if applicable), and iii) on some of the costs related to the credit (e.g. an arrangement fee);
- Misleading presentation of the costs where the cost of the credit is displayed in a way which is false or could deceive consumers, e.g. i) in the way the price is calculated, or ii) if the consumer is not informed that beyond the cost of the consumer credit itself there is an added obligatory insurance. 116 websites (20%) of the websites displayed this kind of problem.
EU Consumer Commissioner John Dalli commentated the results: "When people look for credit they sometimes discover that this credit turns out to be more expensive than it had originally appeared, because important information was sometimes unclear or missing. […] It is therefore very important that businesses provide consumers with the correct and necessary information. And it is the role of the Commission to work together with national enforcers to make this happen."
Source: European Commission