The Federal Government intends to further strengthen consumer protection. Therefore, consumer protection in credit contracts is to be improved. The rights of withdrawal and return in consumer contracts are to be simplified and uniform rights and obligations for cashless payment transactions in the European market are to be created. The Federal Government had already adopted the draft of the Federal Minister of Justice on 5 November 2008. The planned new regulation also serves to implement European directives (Consumer Credit Directive and the civil law part of the Payment Services Directive).
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 protected in the same way in instalment 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. credit transfer, card payment, direct debit). This facilitates cashless payments and increases legal certainty for all parties involved. A single euro payments area (SEPA) will allow 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 necessarily 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 bill will be referred to the specialised committees with the 1st reading. The aim is to conclude the parliamentary consultations by the summer break.
Source: Press release of the Federal Ministry of Justice
Goldberg Attorneys at Law
Michael Ullrich, LL.M. (Information Law)
Lawyer and
Specialist lawyer for information technology law (IT law)
E-mail: m.ullrich@goldberg.de
