ANALYSIS OF DIRECTIVES ON CONSUMER PROTECTION – EU FUNDED
1. PURPOSE OF THE DIRECTIVE
Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010 (“the Directive”) aims, in accordance with article 1, to establish a common framework for certain aspects of the laws, regulations and administrative provisions of the Member States (“MS”) concerning agreements covering credit for consumers secured by a mortgage or otherwise relating to residential immovable property, including an obligation to carry out a creditworthiness assessment before granting a credit, as a basis for the development of effective underwriting standards in relation to residential immovable property in the MSs, and for certain prudential and supervisory requirements, including for the establishment and supervision of credit intermediaries, appointed representatives and non-credit institutions.
LEVEL OF HARMONIZATION: Based on article 2, the Directive is of minimum harmonization and does not prevent MSs from maintaining or adopting stricter provisions in order to protect consumers, provided that these provisions are consistent with their obligations under Union Law. However, MSs may not maintain or introduce provisions derogating from those in article 14(2) and Annex II Part A (to the extent that these relate to standardized pre-contractual information through the European Standard Information Sheet (ESIS)) and of article 17(1) – (5), (7) and (8) and of Annex I to the extent that they concern the common and consistent EU standard for the calculation of the APR.
IMPERATIVE NATURE OF THE DIRECTIVE: According to article 41, MSs ensure that consumers may not waive the rights conferred on them by national law transposing the Directive. Also, it is not possible to circumvent the Directive simply because the contracts are worded in a specific way so as to avoid the application of the Directive to them.
SCOPE OF APPLICATION: Based on article 3, the Directive applies to two types of contracts:
“(a) credit agreements which are secured either by a mortgage or by another comparable security commonly used in a Member State on residential immovable property or secured by a right related to residential immovable property; and
(b) credit agreements the purpose of which is to acquire or retain property rights in land or in an existing or projected building.”
Based on the above article, the Directive does not apply in the following cases:
“(a) Equity release credit agreements where the creditor:
(i) contributes a lump sum, periodic payments or other forms of credit disbursement in return for a sum deriving from the future sale of a residential immovable property or a right relating to residential immovable property; and
(ii) will not seek repayment of the credit until the occurrence of one or more specified life events of the consumer, as defined by MSs, unless the consumer breaches his contractual obligations which allows the creditor to terminate the credit agreement;
(b) credit agreements where the credit is granted by an employer to his employees as a secondary activity where such a credit agreement is offered free of interest or at an APRC lower than those prevailing on the market and not offered to the public generally;
(c) credit agreements where the credit is granted free of interest and without any other charges except those that recover costs directly related to the securing of the credit;
(d) credit agreements in the form of an overdraft facility and where the credit has to be repaid within one month;
(e) credit agreements which are the outcome of a settlement reached in court or before another statutory authority;
(f) credit agreements which relate to the deferred payment, free of charge, of an existing debt and which do not fall within the scope of point (a) of paragraph 1.”
MSs also have the right not to apply specific articles of the Directive, or the Directive itself to certain contracts. These are analyzed in article 3(3) to 3(5) of the Directive.
2. SUBSTANTIAL PROVISIONS
2.1. GENERAL OBLIGATIONS FOR CREDITORS, CREDIT INTERMEDIARIES AND APPOINTED REPRESENTATIVES
Based on article 7, MSs must require that when manufacturing credit products or granting, intermediating or providing advisory services on credit and, where appropriate, ancillary services to consumers or when executing a credit agreement, the creditor, credit intermediary or appointed representative acts honestly, fairly, transparently and professionally, taking account of the rights and interests of the consumers. Based on article 8, it is obliged to provide information to the consumer free of charge regarding compliance with the Directive. Finally, based on article 9, their staff must have an appropriate level of knowledge and activity to undertake, offer or grant credit agreements, carry out credit intermediation activities (i.e. credit brokerage) or provide consulting services.
2.2. INFORMATION/OBLIGATIONS BEFORE THE CONTRACT IS CONCLUDED
ADVERTISEMENTS: Article 10 states that without prejudice to Directive 2005/29/EC, MSs shall require that any advertising and marketing communications concerning credit agreements are fair, clear and not misleading. In particular, article 10 prohibits wording that may create false expectations for a consumer regarding the availability or the cost of a credit.
By virtue of article 11, where an advertisement mentions an interest rate or figures relating to the cost of credit, it should include standardized information. The information is listed in article 11(2) and is the following:
“(a) the identity of the creditor or, where applicable, the credit intermediary or appointed representative;
(b) where applicable, that the credit agreement will be secured by a mortgage or another comparable security commonly used in a Member State on residential immovable property or by a right related to residential immovable property;
(c) the borrowing rate, indicating whether this is fixed or variable or a combination of both, together with particulars of any charges included in the total cost of the credit to the consumer;
(d) the total amount of credit;
(e) the APRC which shall be included in the advertisement at least as prominently as any interest rate;
(f) where applicable, the duration of the credit agreement;
(g) where applicable, the amount of the instalments;
(h) where applicable, the total amount payable by the consumer;
(i) where applicable, the number of instalments;
(j) where applicable, a warning regarding the fact that possible fluctuations of the exchange rate could affect the amount payable by the consumer.”
The above information (apart from that of article 11(2)(a), (b) and (j)) is disclosed by representative example. Where the granting of credit requires the conclusion of a contract relating to the additional service, and in particular the cost of that service, cannot be determined in advance, the obligation to conclude such a contract must be clearly, concisely and prominently stated, together with the APRC.
The above information must be legible or clearly audible, depending on the medium used for the advertisement.
TYING AND BUNDLING PRACTICES: Based on the interpretative provision, a bundling practice is the offering or the selling of a credit agreement in a package with other distinct financial products or services where the credit agreement is also made available to the consumer separately but not necessarily on the same terms or conditions as when offered bundled with the ancillary services. A tying practice is the offering or the selling of a credit agreement in a package with other distinct financial products or services where the credit agreement is not made available to the consumer separately. Under article 12, tying practices are prohibited except where the creditor can demonstrate that the tying products result in a clear advantage for consumers, taking due account of the availability and prices of the relevant products offered on the market.
Irrespective of the above, where the MSs allow it, creditors have the possibility to request from the consumer or a member of his family or a close relative to:
“(a) open or maintain a payment or a savings account, where the only purpose of such an account is to accumulate capital to repay the credit, to service the credit, to pool resources to obtain the credit, or to provide additional security for the creditor in the event of default;
(b) purchase or keep an investment product or a private pension product, where such product which primarily offers the investor an income in retirement serves also to provide additional security for the creditor in the event of default or to accumulate capital to repay the credit, to service the credit or to pool resources to obtain the credit;
(c) conclude a separate credit agreement in conjunction with a shared-equity credit agreement to obtain the credit.”
Finally, MSs may allow creditors to require the consumer to hold a relevant insurance policy related to the credit agreement. In such cases, they must ensure that the creditor accepts the insurance policy from a supplier different to his preferred supplier where such policy has a level of guarantee equivalent to the one the creditor has proposed.
GENERAL INFORMATION: Based on article 13, creditors, tied credit intermediaries or their appointed representatives shall ensure that general information on credit agreements are provided. Such information shall be made available in a clear and comprehensible manner in writing, or on another durable medium or in electronic form. Some of the information is the identity, geographical address of the institution, the purposes for which the credit will be used, the possible duration of the credit agreements, a representative example of the total amount of the credit, a description of the terms directly related to early repayment, a general warning about with the possible consequences of breach of contract etc.
PRE-CONTRACTUAL INFORMATION: Based on article 14, the consumer should also be provided with personalized information necessary to compare credits available on the market, assess their impact and make an informed decision about entering into a credit agreement without undue delay and before the consumer is bound by any credit agreement or offer. This information is provided in writing or on another durable medium with the European Standardized Information Sheet (‘ESIS’). ESIS is included in Annex II.
Any offer binding on the creditor, must be provided in writing or on another durable medium and must be accompanied by the ESIS when no ESIS was previously provided to the consumer or where the characteristics of the offer are different from the information contained in the ESIS previously provided. Of course, MSs can require that the ESIS is provided before providing a binding offer.
In accordance with article 14(6) the time period during which the offer is binding for the creditor is at least 7 days. This period is called the study period during which the consumer may accept the contract, but the creditor may not withdraw its offer. The 7 days may also be a withdrawal period. That is to say, the MSs may elect that 7 days is the period during which the consumer can withdraw after accepting the contract.
Also MSs must specify a time period of at least seven days during which the consumer will have sufficient time to compare offers, assess their implications and make an informed decision.
Finally, based on article 14(11) MSs ensure that at least where no right of withdrawal exists the creditor or, where applicable, the credit intermediary or appointed representative provides the consumer with a copy of the draft credit agreement, at the time of the provision of an offer binding on the creditor. Where a right of withdrawal exists, MSs shall ensure that the creditor or, where applicable, the credit intermediary or appointed representative offers to provide the consumer with a copy of the draft credit agreement at the time of the provision of an offer binding on the creditor.
ADDITIONAL PROVISION OF INFORMATION BY CREDIT INTERMEDIARIES AND APPOINTED REPRESENTATIVES: In accordance with article 15, the credit intermediary or appointed representative must provide the consumer with at least additional information on paper or on another durable medium. Some of the information include the identity and the geographical address of the credit intermediary, the register in which he has been included, whether the credit intermediary offers advisory services, the fees etc.
Credit intermediaries who are not tied but who receive commission from one or more creditors must, at the consumer’s request, provide information on the variation in levels of commission payable by the different creditors providing the credit agreements being offered to the consumer. Where the credit intermediary charges a fee to the consumer and additionally receives commission from the creditor or a third party, the credit intermediary must explain to the consumer whether or not the commission will be offset against the fee, either in part or in full.
It is noted that the fees of the credit intermediary are included in the APRC calculation.
ADEQUATE EXPLANATIONS: Article 16 states that creditors, credit intermediaries or appointed representatives must provide adequate explanations to the consumer on the proposed credit agreements and any ancillary services, in order to place the consumer in a position enabling him to assess whether the proposed credit agreements and ancillary services are adapted to his needs and financial situation. Such explanations include the pre-contractual information, the essential characteristics of the products proposed, the specific effects the products proposed may have on the consumer, including the consequences of default in payment by the consumer, where ancillary services are bundled with a credit agreement, whether each component of the bundle can be terminated separately and the implications for the consumer of doing so.
ASSESSMENT OF CREDITWORTHINESS: Article 18 refers to the obligation of creditors to assess the creditworthiness of the consumer taking into account the factors that cause the verification of the prospect of the consumer to meet his obligations under the credit agreement. In the calculation of the creditworthiness, the fact that the value of the property intended for residence exceeds the amount of the credit should not be taken into account, except where the purpose of the credit agreement is the construction or renovation of the property intended for residence.
The creditor may not cancel or modify a credit agreement on the grounds that the assessment of the consumer’s creditworthiness was not carried out correctly, except where the consumer intentionally omitted or falsified information that he had to provide based on article 20.
The creditor should also inform the consumer that a database search is to be made and in case the credit application is rejected the consumer should be informed of the rejection and where applicable that it is based on automated data processing.
Finally, the creditor should only make the credit available to the consumer where the result of the creditworthiness assessment indicates that the obligations resulting from the credit agreement are likely to be met in the manner required under that agreement.
In relation to the assessment, this is carried out on the basis of information on the consumer’s income and expenses and other financial and economic circumstances which is necessary, sufficient and proportionate. The information must be obtained by the creditor from relevant internal or external sources, including the consumer, and including information provided to the credit intermediary or appointed representative during the credit application process. The information must be appropriately verified, including through reference to independently verifiable documentation when necessary. The creditor is not allowed to terminate the credit agreement because incomplete information was provided unless the consumer concealed or falsified information.
The creditor, credit intermediaries or appointed representatives are also obliged to warn the consumer that if they are unable to perform a credit assessment because the consumer has chosen not to provide the information or verification required for the credit assessment, credit cannot be granted. This warning may be provided in a standardized form.
PROPERTY VALUATION: Under article 19, creditors should use specific standards when valuing property and must take appropriate measures to ensure that the standards are used when the valuation is carried out by a third party.
2.3. APRC
The Annual Percentage Rate of Charge (“APRC”) is the total cost of credit to the consumer, expressed as an annual percentage of the total amount of credit, and equates, on an annual basis, to the present value of all future or existing commitments (drawdowns, repayments and charges) agreed by the creditor and the consumer. The APRC must be calculated in accordance with the mathematical formula set out in Annex I. The rest of the article mentions the other principles for calculating the APRC. These are the following:
- The costs of opening and maintaining a specific account, of using a means of payment for both transactions and drawdowns on that account and of other costs relating to payment transactions must be included in the total cost of credit to the consumer whenever the opening or maintaining of an account is obligatory in order to obtain the credit or to obtain it on the terms and conditions marketed.
- The calculation of the APRC must be based on the assumption that the credit agreement is to remain valid for the period agreed and that the creditor and the consumer will fulfil their obligations under the terms in the credit agreement.
- Where there are clauses allowing variations in the borrowing rate which are unquantifiable at the time of the calculation, then the APRC is calculated on the assumption that the borrowing rate and other charges will remain fixed in relation to the level set at the conclusion of the contract.
- Where the credit agreement concerns a fixed borrowing rate in relation to the initial period of at least five years, at the end of which a negotiation on the borrowing rate takes place to agree on a new fixed rate, the calculation of the additional, illustrative APRC disclosed in the ESIS must cover only the initial fixed rate period, as at the end of the fixed borrowing rate period, the capital outstanding is repaid.
- Where the credit agreement allows for variations in the borrowing rate, the consumer is informed of the possible impacts of variations on the amounts payable and on the APRC at least by means of the ESIS. This is be done by providing the consumer with an additional APRC which illustrates the possible risks linked to a significant increase in the borrowing rate. Where the borrowing rate is not capped, this information shall be accompanied by a warning highlighting that the total cost of the credit to the consumer, shown by the APRC, may change. (This rule does not apply where the previous rule applies).
- Annex I contains other scenarios for how the APRC is calculated (e.g. If a credit agreement gives the consumer freedom of drawdown the total amount of credit shall be deemed to be drawn down immediately and in full.)
2.4. OTHER OBLIGATIONS/ RIGHTS ASSOCIATED WITH THE CREDIT AGREEMENT
FOREIGN CURRENCY LOANS: Based on article 23, where the credit agreement is related to a foreign currency loan, then, at the time the contract is entered there is an obligation imposed on the creditor to provide for a right on the consumer to convert the credit agreement into an alternative currency provided that some conditions are satisfied or, alternatively that there are other arrangements which limit the foreign exchange risk to which the consumer is exposed under the credit agreement. Where the consumer has a right to convert the credit agreement into an alternative currency in accordance with paragraph 1(a), the MSs shall ensure that the exchange rate at which the conversion is carried out is the market exchange rate applicable on the day of application for conversion unless otherwise specified in the credit agreement.
Where a consumer has a foreign currency loan, the creditor must warn the consumer on a regular basis on paper or on another durable medium at least where the value of the total amount payable by the consumer which remains outstanding or of the regular instalments varies by more than 20% from what it would be if the exchange rate between the currency of the credit agreement and the currency of the Member State applicable at the time of the conclusion of the credit agreement were applied. The warning shall (a) inform the consumer of a rise in the total amount payable by the consumer, (b) set out where applicable the right to convert to an alternative currency and (c) the conditions for doing so and (d) explain any other applicable mechanism for limiting the exchange rate risk to which the consumer is exposed.
VARIABLE RATE CREDITS: Under article 24, where a credit agreement is a variable rate agreement, it must:
“a) any indexes or reference rates used to calculate the borrowing rate are clear, accessible, objective and verifiable by the parties to the credit agreement and the competent authorities; and
b) historical records of indexes for calculating the borrowing rates are maintained either by the providers of these indexes or the creditors.”
EARLY REPAYMENT: According to article 25 the consumer has a right to discharge fully or partially his obligations under a credit agreement prior to the expiry of that agreement. In such cases, the consumer shall be entitled to a reduction in the total cost of the credit to the consumer, such reduction consisting of the interest and the costs for the remaining duration of the contract. This is not an absolute rule since the MSs may provide for time limits on the exercise of the right as well as for the right of the creditor to claim compensation for its loss.
Where a consumer seeks to discharge his obligations under a credit agreement prior to the expiry of the agreement, the creditor must provide the consumer without delay after receipt of the request, on paper or on another durable medium, with the information necessary to consider that option. That information shall at least quantify the implications for the consumer of discharging his obligations prior to the expiry of the credit agreement and clearly set out any assumptions used. Any assumptions used shall be reasonable and justifiable.
FLEXIBLE AND RELIABLE: A right granted to creditors can be found in article 26. Under this article, MSs ensure that the claim against the security is enforceable by or on behalf of creditors.
INFORMATION CORNCERNING CHANGES IN THE BORROWING RATE: In accordance with article 27, the creditor must inform the consumer of any change in the borrowing rate in writing or on another durable medium before the new rate comes into force. This shall include at least the following information: the amount of the payments to be made after the new borrowing rate takes effect and, in cases where the number or frequency of the payments changes, particulars thereof.
ARREARS AND FORECLOSURE: According to article 28, creditors must provide for a reasonable grace period before initiating foreclosure proceedings.
2.5. ADVISORY SERVICES
According to article 22 the creditor, credit intermediary or appointed representative explicitly inform the consumer, in the context of a given transaction, whether advisory services are being or can be provided to the consumer. An advisory service is the provision of personal recommendations to a consumer in respect of one or more transactions relating to credit agreements and constitutes a separate activity from the granting of a credit and from the credit intermediation activities.
INFORMATION PRIOR TO THE PROVISION OF ADVISORY SERVICES: Before the provision of advisory services or, where applicable, the conclusion of a contract for the provision of advisory services, the creditor, credit intermediary or appointed representative must provide the consumer information whether the recommendation will be based on considering only their own product range, or a wide range of products from across the market so that the consumer can understand the basis on which the recommendation is made as well as the fee payable by the consumer for the advisory services or, where the amount cannot be ascertained at the time of disclosure, the method used for its calculation. This information must be provided in writing or on another durable medium.
Article 22(3) provides additional principles to be followed in the case of consultancy services. These are the competence and knowledge of staff, the obligations of professional conduct in the provision of credit and the following requirements:
“a) creditors, credit intermediaries or appointed representatives obtain the necessary information regarding the consumer’s personal and financial situation, his preferences and objectives so as to enable the recommendation of suitable credit agreements. Such an assessment shall be based on information that is up to date at that moment in time and shall take into account reasonable assumptions as to risks to the consumer’s situation over the term of the proposed credit agreement;
b) creditors, tied credit intermediaries or appointed representatives of tied credit intermediaries consider a sufficiently large number of credit agreements in their product range and recommend a suitable credit agreements or several suitable credit agreements from among their product range for the consumer’s needs, financial situation and personal circumstances;
c) non-tied credit intermediaries or appointed representatives of non-tied credit intermediaries consider a sufficiently large number of credit agreements available on the market and recommend a suitable credit agreement or several suitable credit agreements available on the market for the consumer’s needs, financial situation and personal circumstances;
d) creditors, credit intermediaries or appointed representatives act in the best interests of the consumer by:
i) informing themselves about the consumer’s needs and circumstances; and
ii) recommending suitable credit agreements in accordance with points (a), (b) and (c); and
e) creditors, credit intermediaries or appointed representatives give the consumer a record on paper or on another durable medium of the recommendation provided”
3. OBLIGATIONS/OPTIONS OF MSs
COMPETENT AUTHORITIES: Based on article 5 of the Directive, MSs must designate the national competent authorities empowered to ensure the application and enforcement of this Directive and must ensure that they are granted investigating and enforcement powers and adequate resources necessary for the efficient and effective performance of their duties. The authorities referred to in the first subparagraph shall be either public authorities or bodies recognised by national law or by public authorities expressly empowered for that purpose by national law. Creditors, credit intermediaries or appointed representatives are excluded from acting as competent authorities.
FINANCIAL EDUCATION: Based on article 6, MSs must promote measures that support the education of consumers in relation to responsible borrowing and debt management.
CONDITIONS APPLICABLE TO CREDITORS, CREDIT INTERMEDIARIES AND APPOINTED REPRESENTATIVES: In accordance with article 7 of the Directive, the MSs require that when manufacturing credit products or granting, intermediating or providing advisory services on credit and, where appropriate, ancillary services to consumers or when executing a credit agreement, the creditor, credit intermediary or appointed representative acts honestly, fairly, transparently and professionally, taking account of the rights and interests of the consumers and also ensure that the manner in which creditors remunerate their staff and credit intermediaries and the manner in which credit intermediaries remunerate their staff and appointed representatives do not impede compliance with the obligation. Also, MSs must ensure that where creditors, credit intermediaries or appointed representatives provide advisory services the remuneration structure of the staff involved does not prejudice their ability to act in the consumer’s best interest and in particular is not contingent on sales targets. In order to achieve that goal, MSs may in addition ban commissions paid by the creditor to the credit intermediary. Finally, they may prohibit or impose restrictions on payments from a consumer to a creditor or credit intermediary prior to the conclusion of a credit agreement.
PROVISION OF INFORMATION FREE OF CHARGE: As already mentioned and based on article 8, MSs must ensure that, when information is provided to consumers in compliance with the requirements set out in this Directive, such information is provided without charge to the consumer.
KNOWLEDGE AND COMPETENCE REQUIREMENTS FOR EMPLOYEES: In accordance with article 9, MSs must ensure that creditors, credit intermediaries and appointed representatives require their staff to possess and to keep up-to-date an appropriate level of knowledge and competence in relation to the manufacturing, the offering or granting of credit agreements, the carrying out of credit intermediation activities or the provision of advisory services. In case that the conclusion of a credit agreement includes an ancillary service, appropriate knowledge and competence in relation to that ancillary service is required. This article also refers to the obligations of MSs in cases where a credit institution/credit intermediary provides services in the territory of one or more MSs.
MSs also have the obligation to require that all information obligations and practices of creditors, credit intermediaries and appointed representatives are fulfilled.
ASSESSMENT OF CREDITWORTHINESS: With regard to the assessment of the consumer’s creditworthiness, MSs must ensure that credit intermediaries or appointed representatives accurately submit the necessary information obtained from the consumer to the relevant creditor to enable the creditworthiness assessment to be carried out. They must also ensure that creditors specify in a clear and straightforward way at the pre-contractual phase the necessary information and independently verifiable evidence that the consumer needs to provide and the timeframe` within which the consumer needs to provide the information.
PROPERTY VALUATION: In relation to the valuation of real estate, the MSs must ensure that reliable standards are established. Also, national authorities are responsible for regulating independent appraisers who carry out property valuations and they must ensure that they comply with the national rules in place.
MSs must ensure that internal and external appraisers conducting property valuations are professionally competent and sufficiently independent from the credit underwriting process so that they can provide an impartial and objective valuation.
DATABASE ACCESS: Based on article 21, each MS must ensure access for all creditors from all MSs to databases used in that Member State for assessing the creditworthiness of consumers and for the sole purpose of monitoring consumers’ compliance with the credit obligations over the life of the credit agreement.
ADVISORY SERVICES: The MSs must establish the standards of the advisory services referred to above. Under article 21(4), MSs may prohibit the use of the terms “advice” and “adviser” or similar terms but if they do not prohibit them they must impose the following conditions on the use of the terms “independent advice” or “independent adviser”:
“a) creditors, credit intermediaries or appointed representatives shall consider a sufficiently large number of credit agreements available on the market; and
b) creditors, credit intermediaries or appointed representatives shall not be remunerated for those advisory services by one or more creditors.”
Also, MSs may provide for an obligation for creditors, credit intermediaries and appointed representatives to warn a consumer when, considering the consumer’s financial situation, a credit agreement may induce a specific risk for the consumer. Furthermore, MSs must ensure that advisory services are only provided by creditors, credit intermediaries or appointed representatives. (With some exceptions)
FLEXIBLE AND RELIABLE MARKETS: Article 26 states that MSs must have appropriate mechanisms in place to ensure that the claim against the security is enforceable by or on behalf of creditors. MSs must ensure that creditors keep appropriate records concerning the types of immovable property accepted as a security as well as the related mortgage underwriting policies used. Also, they must take the necessary measures to ensure appropriate statistical monitoring of the residential property market.
ARREARS AND FORECLOSURE: With regard to default interest and foreclosure and in accordance with article 28(2), MSs may require that, where the creditor is permitted to define and impose charges on the consumer arising from the default, those charges are no greater than is necessary to compensate the creditor for costs it has incurred as a result of the default.
Based on article 28(3) MSs may allow creditors to impose additional charges on the consumer in the event of default. In that case MSs must place a cap on those charges. Furthermore, MSs must not prevent the parties to a credit agreement from expressly agreeing that return or transfer to the creditor of the security or proceeds from the sale of the security is sufficient to repay the credit.
Finally, where the price obtained for the immovable property affects the amount owed by the consumer, MSs must have procedures or measures to enable the best efforts price for the foreclosed immovable property to be obtained. Where after foreclosure proceedings outstanding debt remains, MSs must ensure that measures to facilitate repayment in order to protect consumers are put in place.
SANCTIONS: Article 38 refers to the sanctions which MSs may impose. Specifically, MSs must lay down the rules on sanctions applicable to infringements of the national provisions adopted on the basis of the Directive and must take all measures necessary to ensure that they are implemented. Those sanctions must be effective, proportionate and dissuasive. In this regard, it is important to mention article 38(2). According to this:
«MSs shall provide that the competent authority may disclose to the public any administrative sanction that will be imposed for infringement of the measures adopted in the transposition of this Directive, unless such disclosure would seriously jeopardise the financial markets or cause disproportionate damage to the parties involved.»
4. OTHER RELEVANT PROVISIONS
REQUIREMENTS FOR ESTABLISHMENT AND SUPERVISION OF CREDIT INTERMEDIARIES AND APPOINTED REPRESENTATIVES: Article 29 refers to the obligations of credit intermediaries to obtain a licence to carry out their activities and the related obligations of MSs to license them. Article 30 refers to the obligations of credit intermediaries affiliated to a single credit institution. Article 31 refers to the right of MSs to allow credit intermediaries to appoint appointed representatives.
Article 32 refers to the freedom of establishment and provision of services of credit intermediaries in other MSs and Articles 33 and 34 refer to the manner of withdrawal of the authorisation of credit intermediaries and the supervision of credit intermediaries and appointed representatives.
LICENSING AND SUPERVISION OF NON-CREDIT INSTITUTIONS: Under Article 35, MSs must ensure that non-credit institutions are subject to an appropriate admission process including registration and supervision by a competent authority.
COOPERATION BETWEEN COMPETENT AUTHORITIES OF DIFFERENT MSS: Articles 36 and 37 refer to cooperation between competent authorities in different MS and the resolution of disputes between such authorities.
AMENDMENTS OF OTHER DIRECTIVES AND REGULATIONS: It is noted that articles 46 to 48 of the Directive amend Directives 2008/48/EC, 2013/36/EU and Regulation (EU) No 1093/2010.
