The European Parliament(EP) Wednesday approved new rules governing consumer credit across the 27-nation European Union (EU).
In welcoming the approval, MEP Malcolm Harbour, who serves as a spokesman on the internal market for a political group in the parliament, said the new rules "will give consumers more and better information, making it easier for them to take informed decisions."
Under the new rules, the total cost of loans will be clear and there will be a standard method of calculating interest rates. Consumers will also have to be informed of the reasons if a loan is refused.
The European consumer loans market is worth an estimated 800 billion euros (1.2 trillion U.S. dollars).
"There will be considerable economic benefit, especially in the regions of Europe where consumer credit is at an early stage of development," Harbour said.
Consumer credit has the potential to become a very big single market, "as opposed to the current 27 local markets where transparency and competition are hampered by differing and sometimes very complex sets of national rules," he said.
"This is the result of a five-year campaign by the parliament to get an effective and workable directive, that sustains a high level of consumer protection while capturing the potential of open markets," Harbour said.
"Standard, comparable information for all EU credit loans will make the market more transparent for business and consumers. This is good for business selling across borders and good for consumers who want to make informed choices," EU Consumer Commissioner Meglena Kuneva said after the parliament voted in favour of her proposal.
The new legislation was passed due to the support of three main political groups -- the conservatives, the socialists and the liberals.
It would be finally approved by EU member states before going into force by early 2010.
Source: Xinhua
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