Consumer Credit Directive

Transcription

1 Consumer Credit Directive Implementation in Austria Leaseurope, 15 April 2011 Andreas Maier Head of Legal and Compliance BAWAG PSK Leasing

2 Legal Framework - EU Directive 87/103/EEC of 22 December 1986: harmonization of legal provisions concerning consumer credits. Commission reports of 1995 and 1997: Member States used various consumer protection mechanisms. Even more stringent mandatory provisions were adopted. => Distortion of competition among creditors in the Community. Directive 2008/48/EC of 23 April 2008 on credit agreements for consumers (CCD): development of a more transparent and efficient credit market in view of the continuously developing market in consumer credit and the increasing mobility of European citizens Member states may not maintain or introduce in their national law provisions diverging from those laid down in the Directive (Art. 22(1) CCD). Leaseurope CCD Implementation in Austria Andreas Maier April

3 Scope of the Directive The Directive shall apply to consumer credit agreements, except for (among others): Mortgage loans. Loans to acquire or retain property rights in land. Loans less than EUR 200 and more than EUR Loans by employers to employees free of interest or at percentage rates lower than market level. Hiring or leasing agreements where an obligation to purchase the object of the agreement is not laid down either by the agreement itself or by any separate agreement; such an obligation shall be deemed to exist if it is so decided unilaterally by the creditor. (Art. 2(2)(d) CCD) Nevertheless finance lease included in Austrian Consumer Credit Act, even when Lessee is liable for the residual value risk but is not entitled to buy the asset. Leaseurope CCD Implementation in Austria Andreas Maier April

4 Implementation in Austria Implementation of Directive 2008/48/EC through newly enacted Consumer Credit Act (CCA) and several changes in existing laws. CCA in force since 11 June Transition period until 31 October 2010 for (pre-contractual) information requirements. Implementation supported by existing provisions especially in Consumer Protection Act and Banking Act. Leaseurope CCD Implementation in Austria Andreas Maier April

5 CCA Scope CCA applicable to (Art. 26(1) CCA): Leasing agreements, when lessee is obliged to buy the asset at end of term. Leasing agreements with put option for lessor at end of term. Leasing agreements with call option for lessee at end of term. Leasing agreements, when lessee is liable for residual value but not entitled to buy the asset. Leaseurope CCD Implementation in Austria Andreas Maier April

6 CCA Core Provisions (1) Right for consumer of withdrawal, early redemption, termination. Extensive and detailed information obligations: advertising, pre-contractual information, contractual information. Sanctions. Leaseurope CCD Implementation in Austria Andreas Maier April

7 CCA Core Provisions (2) Right for consumer of withdrawal within 14 calendar days: Consumer has to pay capital plus interest, no other compensation. Not applicable when lessee has call option at end of term, when lessee is liable for residual value but not entitled to buy the asset. Right for consumer of early redemption or termination any time: Consumer has to pay outstanding amount discounted to termination date, reduced by costs for remaining term (except one-off costs), reduced by value of asset at return date, if consumer returns asset, plus in specific cases (e.g. fixed interest rate) compensation (max. 1% of amount of credit repaid early; 0,5% when termination within first year). Leaseurope CCD Implementation in Austria Andreas Maier April

8 CCA Core Provisions (3) Advertising: Detailed information when indicating interest rates or any figures relating to the costs in any advertising: interest rate (fixed or floating) and any charges included in the total costs, total amount of credit, annual percentage rate of charge, duration, total amount payable by consumer and amount of instalments. Leaseurope CCD Implementation in Austria Andreas Maier April

9 CCA Core Provisions (4) Pre-contractual information: Detailed information prior to any commitment of consumer (among others): type of credit, identity and address of creditor, total amount of credit, drawdown conditions and duration, interest rate, index or reference rate, conditions for changing interest rate, annual percentage rate of charge and total amount payable by consumer, amount, number and frequency of instalments, the obligation, if any, to enter any ancillary contract, e.g. insurance policy, default interest rate, right of withdrawal, early redemption, etc. Leaseurope CCD Implementation in Austria Andreas Maier April

10 CCA Core Provisions (5) Pre-contractual information: Standard European Consumer Credit Information form (SECCI) to be used - Annex II to Directive. Drafted and structured for credits => misleading terms for leasing. SECCI adopted for leasing by Austrian Leasing Association in consultation with Austrian Ministry of Justice. Amendments minor only and focused on terms (e.g. creditor => lessor). 4 additional pages for the consumer Contractual information: Like pre-contractual information with some adaptations and additional information (e.g. right of consumer to request repayment schedule any time). Leaseurope CCD Implementation in Austria Andreas Maier April

11 CCA Core Provisions (6) Information requirements: Several provisions needed thorough legal and economic consideration and discussion, in particular annual percentage rate of charge: total amount payable by consumer expressed as percentage rate per year, all payment obligations to be included, e.g. fees, duties, insurance rates if insurance is compulsory for lessee, in specific cases confusing high rate (e.g. short-term prolongation), complex calculation formula. Leaseurope CCD Implementation in Austria Andreas Maier April

12 CCA Core Provisions (7) Example: Standard vehicle leasing contract Calculation basis: Instalment: Pre-CCA no change no change Post-CCA Total amount payable by consumer: Interest rate: Annual percentage rate of charge: Right of withdrawal, early redemption, termination: Contract pages: total of instalments + equity + residual value + administration fee reference rate only no information provided no information provided 5 pages (1 cover + 4 general conditions) higher, because stamp duty included reference rate + margin higher than interest rate, because administration fee and stamp duty included information provided 10 pages (2 cover + 4 general conditions + 4 SECCI) Leaseurope CCD Implementation in Austria Andreas Maier April

13 CCA Sanctions Penalty up to EUR for infringements, e.g. incomplete or wrong information, repayment schedule not provided upon request of lessee, no information about change of interest rate, creditworthiness not checked appropriately. Civil law sanctions, e.g. no information about interest rate, annual percentage rate of charge or total amount payable by consumer => interest rate according to applicable law, when lower annual percentage rate of charge is indicated in the information => interest rate will be reduced accordingly, no information about conditions and procedures for changing the interest rate => no change detrimental for consumer possible. Leaseurope CCD Implementation in Austria Andreas Maier April

14 CCA - Market Research (1) Question: There is a new Consumer Credit Act in force since summer last year. Have you heard of it? Percentage of respondents who have heard about CCA TOTAL 24% recent car purchaser 23% future car purchaser 28% experienced in leasing 31% current leasing user 30% 14 Source: INTEGRAL Markt- und Meinungsforschung Leaseurope CCD Implementation in Austria Andreas Maier April

15 CCA - Market Research (2) Question: There are several new provisions for consumer financing in the CCA. Which of these new provisions are important for you? Total amount payable Annual percentage rate of charge Right of withdrawal Residual value risk SECCI general very important - - not important Repayment schedule Right of termination Interest rate in advertising Information on total amount payable is regarded as most important aspect of new law! 15 Source: INTEGRAL Markt- und Meinungsforschung Leaseurope CCD Implementation in Austria Andreas Maier April