Summary

Consumer credit (mortgage/loans for the purchase or transformation of private property excluded) is a fundamental component of economic growth. Not only does it provide individuals with access to goods and services and enable manufacturers and service providers to sell their products but it also contributes to the operating results of many financial and non-financial organisations. Within the EU, legal rules, as well as market structures, products and cultures vary greatly from one country to another and there is no single market in consumer credit. Steps towards a single market will need to encompass varied areas such as APR calculation, advertising and marketing techniques and lender liability. A move towards an internal market for consumer credit whether by loan, overdraft or credit card could be achieved via a new directive enabling consumers to compare offers coming from different Member States. It will be important to safeguard free competition, consumer protection and data protection in order to increase transparency and comparability within the EU.

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The Economic Importance of Consumer Finance

Consumer finance in the form of outstanding balances on installment loans or credit cards represented around 616bn Euro in the EU in 2000. The following figures show that outstanding credit in Germany and the UK is far greater than in the rest of the EU member states. The structures of the market, the actors and the distribution channels are also quite different. Compared to the American market, US consumers spend 7 times as much as European consumers via their credit cards and have more cards. There are 187 credit cards for 1 000 people in Europe and 1 986 for 1 000 people in the US.