In future, consumers will receive better information on credit agreements and will be protected from dubious bait-and-switch offers. At the same time, cashless payment transactions in the European Union will be simplified. On 2 July 2009, the German Bundestag passed in second and third reading the law on the implementation of the Consumer Credit Directive, the civil law part of the Payment Services Directive as well as on the reorganisation of the regulations on the right of withdrawal and return.
On the regulations in detail:
1. consumer loan
- Information and contract explanation: In future, a consumer is to be informed about the essential components of the loan even before concluding a loan contract. This will enable the consumer to compare different offers and make an informed decision. This strengthens the guiding principle of a responsible and independently acting consumer. As soon as the choice of a certain credit becomes apparent, the main features of the contract must additionally be explained to the consumer.
- Advertising: Advertising for loan contracts will be more strictly regulated. Those who advertise the conclusion of loan contracts may not only highlight a single figure (such as a particularly low interest rate). Rather, he must also state the other costs of the contract and explain this information with a realistic example. This prevents bait-and-switch offers and enables consumers to weigh up the advantages and disadvantages of concluding a contract themselves on the basis of meaningful information.
- Model for consumer loans: In the future, uniform models for informing consumers will apply to different credit agreements. All costs of the loan will be recognisable on the basis of these models. Different offers can be compared better than before. The models apply throughout Europe, so that customers can also obtain and compare offers from other European countries.
- Termination: The termination of loan agreements is newly regulated. Termination by the lender is now only permissible for open-ended contracts if a notice period of at least two months has been agreed. Consumers, on the other hand, can terminate an open-ended contract at any time. In this case, the notice period for the consumer may not exceed one month. In the case of fixed-term contracts that are not secured by a lien on real property such as a land charge or mortgage, consumers may repay the loan in full or in part at any time in the future. If the lender demands an early repayment fee in such a case, it is limited to a maximum of one percent of the amount repaid early. The new regulations cover not only pure loan agreements, but also other financing transactions. This means that consumers are basically protected in the same way in instalment payment transactions and finance leasing contracts as in consumer loan contracts.
2. payment services
In the area of cashless payment transactions, rights and obligations for payment services will be largely uniform throughout Europe in the future. For the first time, there are uniform rules for both purely domestic and cross-border payment procedures (e.g. bank transfer, card payment, direct debit). This facilitates cashless payments and increases legal certainty for all parties involved. A single euro payments area (SEPA) allows payment service providers to develop Europe-wide procedures for payments in euros (so-called SEPA products).
Examples: A European direct debit system will make it possible for electricity and telephone costs for a holiday flat on Tenerife or the rent for the room in the student dormitory during a stay abroad to be conveniently debited monthly from a German account. Even for orders from other European countries, payment no longer has to be made by credit card, but can be made by direct debit or bank transfer.
Therefore - as far as the question of payment is concerned - the location of a provider will no longer be an obstacle for a customer to choose the cheapest offer. At the same time, a level playing field promotes cross-border competition. This is because uniform specifications on the information of customers will make it easier to also evaluate the offer of foreign payment service providers.
Finally, the new regulations lead to a standardisation and shortening of the execution and value dates: Until now, cross-border transfers in the EU have to be made within five business days. As of 1 January 2012, all payment orders in euro must be executed within one business day. Until then, a 3-day execution period can be agreed. This allows payment service users to fulfil their payment obligations in a more targeted manner and to work with their money for as long as possible.
3. right of revocation and return
The already existing regulations on the right of withdrawal and return are reorganised. This leads to more legal certainty, not only for consumer contracts but also for insurance contracts. Entrepreneurs who use the new models for their instructions on the right of withdrawal and return no longer have to fear warnings under competition law or unlimited rights of withdrawal or return. In addition, largely the same cancellation periods and cancellation consequences apply to distance selling transactions via an internet auction platform and those in a conventional internet shop.
The law passed by the Bundestag on 02.07.2009 still has to pass the Bundesrat. It is not subject to approval. The provisions implementing the Payment Services Directive will enter into force on 31 October 2009, otherwise the law will enter into force on 11 June 2010.
Source: Press release of the Federal Ministry of Justice
Goldberg Attorneys at Law
Attorney at Law Michael Ullrich, LL.M. (Information Law)
Specialist lawyer for information technology law (IT law)
E-mail: info@goldberg.de
