EU credit rules could hit UK borrowing

You may find it harder to get credit if proposals currently being put forward by the European Union are put into effect. The Directive, which was first published in September 2002, is being debated in the European Parliament. It aims to harmonise legislation on consumer credit in European Union (EU) countries and will affect all forms of lending including mortgages, overdrafts, credit cards, store cards and hire purchase agreements.

The UK credit market is the most developed in Europe and Britain accounts for around 30% of all credit granted in the EU. Now a report by economic consultancy OXERA says the Directive could knock 4 billion off UK consumer spending and at least 2 billion off UK economic turnover as a whole.

The report, which was sponsored by lending institutions, says the Directive would increase the risks of lending, limit consumer choice and impose unnecessary costs on credit providers - costs that would be passed on to consumers. However, consumer groups and debt counsellors have welcome the EU proposals

Among the requirements that would be imposed - every time your credit card spending limit is increased (something that happens almost automatically now) you would have to sign a new credit agreement.

The proposed responsible lending provisions are also likely to mean that those with low credit ratings (for whatever reason) would find it increasingly difficult to get credit without paying penalty rates.

Other factors that could increase the cost of borrowing include, in particular, the obligations placed upon providers of overdrafts and the provision for a cooling-off period for credit arrangements agreed on retailers' premises.

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Reply to
Dudley
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UK credit market may be large but definedly less developed than here. The banks are efficient and credit margins low, 0.6% for a mortgage. And they know their customers.

If that 30% is true, then Britons have got a problem. Don't make the same mistakes as Americans. The most prosperous nations in Europe are those which are most sparsam.

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First Surname

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