On 1 July 2011, amendments concerning consumer credit contracts under the Law of Obligations Act entered into force. The amendments transpose into Estonian law the new Consumer Credit Directive (2008/48/EU), the objective of which is to ensure a single consumer credit market and a high level of consumer protection in the European Union.
The amendments lay down the principle of responsible borrowing and lending, under which credit products must meet the needs of consumers and be adjusted to the consumer’s ability to repay. For this purpose, before concluding a consumer credit contract, the creditor must:
- Acquire information that enables it to assess the creditworthiness of the consumer. If necessary, the creditor asks for information from the consumer and uses relevant databases.
- Assess the creditworthiness of the consumer.
- Give sufficient explanations so that the consumer can estimate whether the consumer credit contract offered is in conformity with their needs and means.
A similar obligation also lies with the creditor where a loan or maximum limit changes after concluding a credit contract. These obligations were not explicitly provided by law earlier.
Under the new regulation, the volume of information to be disclosed to the consumer prior to concluding a contract will significantly change. The information supplied to the consumer will also be harmonised, so that information suppliers must use a uniform European standard consumer credit information sheet that must allow for uniform comparability of information supplied to consumers. As the Consumer Credit Directive applies throughout the entire European Union and information supplied to consumers will be harmonised, an increase in cross-border demand and supply of credit may be expected.
These are only some of the amendments that entered into force. In addition, the principles for calculating the cost of credit also changed, the period during which a consumer may withdraw from a consumer credit contract was extended, plus other smaller amendments.
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Amendments to Consumer Credit Regulaton
On 1 July 2011, amendments concerning consumer credit contracts under the Law of Obligations Act entered into force. The amendments transpose into Estonian law the new Consumer Credit Directive (2008/48/EU), the objective of which is to ensure a single consumer credit market and a high level of consumer protection in the European Union.
The amendments lay down the principle of responsible borrowing and lending, under which credit products must meet the needs of consumers and be adjusted to the consumer’s ability to repay. For this purpose, before concluding a consumer credit contract, the creditor must:
A similar obligation also lies with the creditor where a loan or maximum limit changes after concluding a credit contract. These obligations were not explicitly provided by law earlier.
Under the new regulation, the volume of information to be disclosed to the consumer prior to concluding a contract will significantly change. The information supplied to the consumer will also be harmonised, so that information suppliers must use a uniform European standard consumer credit information sheet that must allow for uniform comparability of information supplied to consumers. As the Consumer Credit Directive applies throughout the entire European Union and information supplied to consumers will be harmonised, an increase in cross-border demand and supply of credit may be expected.
These are only some of the amendments that entered into force. In addition, the principles for calculating the cost of credit also changed, the period during which a consumer may withdraw from a consumer credit contract was extended, plus other smaller amendments.