House of Lords Condemns EU Credit Directive, 6th July 2006

The House of Lords Inquiry into the proposed EU Consumer Credit Directive yesterday released its final report, and called for work on the Directive to be suspended pending the completion of a full impact assessment into the European Commission's proposals. The Inquiry, to which Debt on our Doorstep submitted evidence earlier this year, raises significant concerns about the lack of consumer protection in the Directive, and in particular opposes the mututal recognition principle that, if implemented, would leave UK borrowers from foreign lenders reliant on the lenders' home country laws for protection - 'we conclude that the mututal recognition provisions.. are confusing, unnecessary and detrimental to the interests of consumers'.

On the issue of responsible lending, the inquiry concludes that 'making offers of credit on the basis of inadequate information in a highly pressured marketing environment contributes to the causes of over-indebtedness' and states that self-regulation through industry codes of practice is inadequate and does not replace the need for legislation.

Debt on our Doorstep welcomes the recommendations of the Inquiry, and calls for these to be taken forward by the DTI in their future negotiations on the Directive.

Damon Gibbons, Chair of Debt on our Doorstep, commented:

'This has been a thorough inquiry and we are pleased that many of the issues raised in our submission have been taken up. There is an urgent need for the DTI to now respond formally to this inquiry and to clarify their position in negotiations on the Directive. For example, the DTI had previously been angling to get the responsible lending provisions in the Directive watered down. This inquiry reveals that approach to be entirely incorrect. The Government must clarify where it now stands."

A copy of the full report is available on the Lords Select Committee website