Consultation on interest rate restrictions in the EU

The Commission has published a study on interest rate restrictions in the EU. It has opened a public consultation based on this study. The basic objectives of the study were to identify the different types of interest rate restrictions (IRR) and analyse their economic, financial and social impacts on various stakeholders. IRR are legal rules that limit (directly or indirectly) the price of credit contracts.

All EU Member States apply a principle of "fairness" to prevent the exploitation of the weaker party. However there is a broad range of interest rate ceilings, from 453%p.a. for a small loan in Slovenia to a cap of 13.2% p.a. for a long-term loan there as compared to ceilings for different forms of credit in France ranging from 5.72% p.a. to 21.63% p.a.

The study also gives an overview of the consumer credit markets in all EU Member States and detailed information on Germany, France, Netherlands, Poland, Sweden and United Kingdom. It also presents various hypotheses on the basis of which it is concluded that it is plausible that IRR reduce access to credit, particularly for low income borrowers and also the number of product types, and lead to increased charges as providers try to compensate for reduced revenues.

Interested stakeholders are invited to say if policies on IRR are justified and do they act as a barrier to the integration of the EU credit market? In particular is there a need for further action at EU level?

The consultation remains open until 22 March 2011. Further information is available here.