A New Retail Credit Regime for Europe - Setting the Right Priorities

The recent institutional re-shuffle has charged new internal market Commissioner Michel Barnier with the task of evaluating costs and benefits of re-designing the regulatory framework currently governing the EU’s retail credit market(s). 

Barnier’s team will have to set its sails for the headwinds if in favor of a policy decision tightening the legislative grip on a sector that moved into the spotlight in the wake of the financial crisis.

This is especially true as regards mortgage lending, with the EU executive encountering tough opposition to new rules. However, loans for house purchase account for the largest share in the credit portfolio of European households yet are not covered by EU-wide legislation: it is argued that the fragmentation of the EU’s mortgage markets along national lines and the un-homogeneous nature of existing market deficiencies in the different member states rendered pan-European action irrelevant.

In addition, with responsible authorities in the 27 member states currently working on the transposition of the new Consumer Credit Directive (CCD) into national law, the Commission is urged by lenders and those member states gold-plating the CCD (i.e. applying certain provision to mortgage credit) to await the Directive’s full implementation deadline set for June 2010 before considering further regulatory action.

Embedded in and related to the broader agenda of responsible lending and borrowing lay further widely debated topics such as financial advice standards, unfair commercial practices, the activity of credit intermediaries, the collection and access to personal credit information, or collective redress mechanisms.

Within the context of these discussions and in the light of the ongoing implementation of the new CCD, CEPS/ECRI proposes to launch a new Task Force that will look at how the EU could most efficiently respond to the challenges posed and deficiencies revealed by the financial crisis in the area of retail credit. After taking stock of the most recent EU policy developments and debates, the CEPS/ECRI Task Force will focus on the markets for consumer credit and housing loans and whether additional regulation is the best way of addressing existent shortcomings.
For more detailed information on this Task Force, please consult the Prospectus which you find below.

Chair: Rosa-Maria Gelpi, Former Vice-President, BNP Paribas Personal Finance

Rapporteurs:
Achim Dübel, Director, Finpolconsult.de, Berlin
Marc Rothemund, Research Fellow, CEPS/ECRI
Maria Gerhardt, Research Assistant, CEPS/ECRI

Meetings:
1st meeting: 11 May 2010
2nd meeting: 6 July 2010
3rd meeting: 20 October 2010
4th meeting: 25 January 2011

Final Report published on 6 July 2011, please download here .

Prospectus