Thursday

28th Mar 2024

EU authorities shield names of consumer credit sinners

  • Hundreds of consumer credit websites failed the EU-wide sweep (Photo: chiara marra)

EU institutions and national authorities have refused to disclose the names of online credit companies which mislead customers, despite raising alarm about widespread abuses in the sector.

Two-thirds out of 242 European banks and another 320 intermediary companies involved in credit card services failed an assessment launched last September by the 27 EU countries plus Iceland and Norway.

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Out of the survey, only Bulgaria, Greece, Iceland and Ireland cited no problems whatever.

The vast majority of sites offering credit products - such as credit cards, personal loans or car loans - either give misleading information, omit essential information or fib about costs.

The most common violation was failure to disclose the annual percentage rate (APR) on credit and whether interest rates are fixed or variable. Firms also gave out poor information on whether people had to buy insurance before getting money.

The European Commission devoted a special press briefing to the results in Brussels on Tuesday (10 January). But the commissioner in charge of consumer policy, John Dalli, declined to name the culprits, saying it is up to national authorities to enforce EU consumer protection laws.

He said the consumer credit sector is "underperforming for consumers" but noted that: "co-operation among national authorities is of critical importance and is yielding results for both consumers and business."

EUobserver contacted several national authorities on the matter. But all of them refused to provide details on the identity of the offending websites.

"Unfortunately at this stage we are unable to disclose details of the 47 websites/companies investigated because of restrictions under the Enterprise Act," a spokesman for the UK's Office of Fair Trading (OFT) said in an email response. He also declined to say whether any of the 47 belonged to state-owned banks.

Thirty eight credit websites out of 47 investigated by the UK failed to comply with EU consumer law.

Spain's National Institute for Consumer Protection said that 29 out of the 29 credit websites it looked at failed the check. It too declined to name them or to say if any were effectively state-run.

The silence policy was repeated in Germany and Denmark. Denmark confirmed that no Danish banks were found to be in breach of EU norms, however.

The OFT explained that the criteria used to select which websites would undergo screening was left up to national bodies rather than being handed down from Brussels - the sample of 47 sites represents a tiny fraction of the 90,000 consumer credit websites registered with the OFT.

"For the purposes of the sweep the OFT focused primarily on web sites of lenders offering short term loans targeting sub-prime or non-status consumers. Our approach to focus on websites aimed at sub-prime consumers was to ensure that we were targeting our resources where the risk of consumer harm may be higher," the OFT spokesman said.

For its part, the EU commission said that contracts signed by people with infringing companies are valid unless annulled on a case-by-case basis by national authorities.

It added that EU governments should notify the offending companies about the problem and send in follow-up reports to the EU capital in autumn.

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