Commission Recommendation

of 1 March 2001

on pre-contractual information to be given to consumers by lenders offering home loans

(notified under document number C(2001) 477)

(Text with EEA relevance)

(2001/193/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community, and in particular the second indent of Article 211 thereof,

Whereas:

(1) Achieving a single market for financial services offering consumers a high level of protection is a priority for the Community. Signing a home loan contract is often the most important financial commitment that a consumer enters into. Home lending is an area of financial services where consumers could gain substantial benefit from increased corss-border activity provided that adequate protective measures are in place.

(2) It is essential in that contex that the pre-contractual information as to the terms and conditions on which home loans are offered throughout the Community are transparent and comparable. To that end, lenders should be invited to provide consumers with two sets of harmonised information, namely one containing general information and the other containing personalised information. The personalised information should be provided in a standard written format, known as a European Standardised Information Sheet.

(3) The elements of information - both general and personalised - to be given to consumers by lenders, have been negotiated under the auspices of the Commission by the associations and federations representing lenders, on the one hand, and consumers, on the other. These negotiations have resulted in a Voluntary Code of Conduct on pre-contractual information for home loans (the "Code"), a copy of which can be obtained from the adhering lenders. Adherence to the Code is open to all home loan lenders, regardless of whether they are members of one of the negotiating associations and federations.

(4) In certain Member States national requirements on additional pre-contractual consumer information for home loans already exist. It is desirable that these additional information elements be merged with those in the European Standardised Information Sheet and that this be done in a manner that ensures comparability across borders for the consumer at European level. Where a Member State imposes on lenders from other Member States an obligation to give additional pre-contractual information to consumers above and beyond what is set out in the Annexes, it is invited to ensure that this information is in conformity with Community law.

(5) Both domestic and cross-border home loans should be subject to this recommendation, excluding credit agreements which are covered by Council Directive 87/102/EEC of 22 December 1986 on the approximation of laws, regulations and administrative provisions of the Member States concerning consumer credit(1), as last amended by Directive 98/7/EC of the European Parliament and of the Council(2).

(6) The Commission will establish a central register of lenders offering home loans, indicating whether or not those lenders adhere to the Code, as well as the date on which those lenders notified their adherence to the Commission. The Commission will, by all appropriate means, ensure that the public at large can consult this central register.

(7) The Commission will monitor compliance with this recommendation and assess its effectiveness. The Commission will consider presenting binding legislation, should the terms of this recommendation not be fully complied with,

HEREBY RECOMMENDS:

Article 1

Scope

This recommendation covers pre-contractual consumer information for domestic and cross-border home loans.

Credit agreements covered by Directive 87/102/EEC are excluded from the scope of this recommendation.

Article 2

Definition

For the purposes of this recommendation, a home loan means a credit to a consumer for the purchase or transformation of the private immovable property he owns or aims to acquire, secured either by a mortage on immovable property or by a surety commonly used in a Member State for that purpose.

Article 3

Principles

The lender should supply to the consumer in the course of the pre-contractual phase:

(a) general information as set out in Annex I;

(b) personalised information to be presented in a European Standardised Information Sheet as set out in Annex II.

In addition, the lender should supply to the consumer information on the identification, address and telephone number of the competent body to which the consumer can refer in the event of difficulties in relation to the application of the Code on pre-contractual information for home loans.

The final decision to acept a credit offer from a lender lies with the consumer.

Article 4

National requirements on additional pre-contractual consumer information

Should pre-existing national requirements provide that additional pre-contractual consumer information is to be given to the consumer, Member States are invited to take all necessary steps in order that this additional information may be merged with the information included in the European Standardised Information Sheet in a manner that does not impair comparability across borders.

Each Member State is moreover invited to ensure that those additional nation requirements are imposed on lenders from other Member States offering home loans in the territory of that Member State only if those additional requirements are in conformity with Community law.

In this case, the host Member State is invited to notify the requirements to the Commission so that the latter can consider them in the framework of its monitoring activity set out in Article 6.

Article 5

Establishment of a register by the Commission

The Commission will establish a central register of lenders offering home loans, indicating whether or not those lenders adhere to the Code.

Article 6

Monitoring by the Commission

The Commission will monitor compliance with this recommendation.

Two years after adoption of this recommendation, the Commission will assess its effectiveness: the assessment will be based on its own monitoring, on annual progress reports to be drawn up by the European Credit Sector Associations, and on any other information available.

Article 7

Final provision

Member States and lenders offering home loans in the Community, regardless of whether they are members of the associations and federations who negotiated the Code, are invited to comply with this recommendation by no later than 30 September 2002.

Article 8

Addressees

This recommendation is addressed to the Member States.

Done at Brussels, 1 March 2001.

For the Commission

Frederik Bolkestein

Member of the Commission

(1) OJ L 42, 12.2.1987, p. 48.

(2) OJ L 101, 1.4.1998, p. 17.

ANNEX I

Initial information about home loans should include or be accompanied by the following information in the same format as that initial information is itself provided:

A. Lender

1. Identification and address of the lender.

2. Where appropriate, identification and address of the intermediary.

B. Home loan

1. Purposes for which the home loan may be used.

2. Form of surety.

3. Description of the types of home loans available with short description of the differences between fixed and variable rate products, including related implications for the consumer.

4. Types of interest rate - fixed, variable, and combination thereof.

5. An indication of the cost of a typical home loan for the consumer.

6. A list of related cost elements, such as, administrative costs, insurance costs, legal costs, intermediaries costs.

7. The different options available for reimbursing the credit to the lender (including the number, frequency, amount of repayment instalments if any).

8. Whether there is a possibility of early repayment (if so, its conditions).

9. Whether a valuation of the property is necessary and, if so, by whom it has to be carried out.

10. General information on tax relief on home loan interest or other public subsidies prevailing, or information on where one can obtain further advice.

11. The duration of the reflection period, where relevant.

12. Confirmation that the institution subscribes to the Code, and indication that a copy of the Code is available in the institution.

ANNEX II

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