ABBL

The the scope of application is limited to consumer credit agreements in the strict sense. Are excluded:

• credit agreements which are secured either by a mortgage or by another comparable security or by a right related to a movable property (mortgage loan);
• credit agreements whose main purpose is to permit the acquisition or retention of property rights in land or in an existing or projected building; 
• credit agreements involving a total amount of credit less than EUR 200 or more than EUR 75,000;
• hiring or leasing agreements where an obligation to purchase the object of the agreement is not laid down either by the agreement itself or by any separate agreement;
• credit agreements granted in the form of an overdraft facility in the case of which the credit has to be repaid within one month;
• credit agreements where the credit is granted free of interest and without any other charges and credit agreements under the terms of which the credit has to be repaid within three months and only insignificant charges are payable;
• credit agreements where the credit is granted by an employer to his employees as a secondary activity free of interest or at annual percentage rates of charge lower than those prevailing on the market and which are not offered to the public in general;
• credit agreements which are concluded with investment firms or with a credit institution for the purpose of allowing an investor to carry out a transaction relating to certain types of financial instrument where the investment firm or credit institution granting the credit is involved in such transactions (Lombard Credit);
• credit agreements which are the outcome of a settlement reached in Court or before another statutory authority;
• credit agreements which relate to the deferred payment free of charge of an existing debt;
• credit agreements upon the conclusion of which the consumer is requested to deposit an item as security in the creditor’s safekeeping and where the liability of the consumer is strictly limited to that pledged item;
• credit agreements which relate to loans granted to a restricted public under a statutory provision with a general interest purpose and at lower interest rates than those prevailing on the market or free of interest or on other terms which are more favourable to the consumer than those prevailing on the market and at interest rates not higher than those prevailing on the market.

Before the conclusion of the credit agreement, the consumer must have at his disposal the items of information which will enable him to make his choice with a full knowledge of the facts. The purpose of this standardised presentation of the pre-contractual information is to enable consumers to make an easier comparison of the different offers. For the credit institution, the presentation of the form to the consumer constitutes evidence that it has performed its duty of informing the consumer.

If the credit institution wishes to give further information to the consumer it must do so in a separate document which may be annexed to this form.

The consumer may likewise ask for a copy of the draft credit agreement which may, however, be withheld if, at the time when the request is made, the institution is not willing to enter into the credit agreement with the consumer.

Lastly, the credit institution must give the consumer explanations enabling him to compare the different offers and determine whether the proposed credit agreement is appropriate to his needs and financial situation. It will draw the attention of the consumer to the principal characteristics of the products which are proposed and the particular effects which they may have on him, including the consequences of payment default.

The professional must therefore make sure that the consumer has received all the information needed by him in order to make an informed judgement on the offers. The requirements concerning prior information for the consumer are less stringent in the case of credit agreements taking the form of an overdraft facility which is repayable on demand or within a maximum period of three months and for overruns because of the small amounts involved and the necessary flexibility required for these types of financing.

Finally, greater flexibility is also stipulated in the case of credits for which the consumer who is already in a situation of payment default reaches an arrangement with the institution in respect of the payment dates and methods of repayment.

The credit agreement must be drawn up on paper or on any other durable medium. It will be made out in as many copies as there are contracting parties.

The credit agreement contains, in particular, all the information given to the consumer during the pre-contractual phase.

An indication must also be given of the fact that the consumer is entitled to receive at his request and free of charge a statement taking the form of an amortisation table, together with a detailed explanation of the content of the latter in the event of amortisation of the capital of a fixed-term credit agreement. This amortisation table indicates:

• the payments due, together with the periods and conditions for the payment of these amounts;
• a breakdown of each repayment between capital amortisation, interest calculated on the basis of the borrowing rate and, where appropriate, additional costs.

If the interest rate is not fixed or if additional costs may be changed under the terms of the credit agreement, the amortisation table must indicate in a clear and precise manner the fact that the data given in the table will be valid only until the next change of the borrowing rate or of the additional costs in compliance with the credit agreement.

The code further stipulates that the following information must be set out in the agreement:

• if costs and interest are payable without capital amortisation, a statement of the periods and conditions for payment of the borrowing interest and recurring and non-recurring ancillary costs;
• the procedure to be followed to exercise the right of termination of the credit agreement;
• whether or not there is an out-of-court complaint and redress mechanism for the consumer and, if so, the methods for having access to such a mechanism;
• where applicable, the other contractual clauses and conditions;
• the name and address of the appropriate supervisory authority.

The fact that the professional may send the contractual terms and conditions to the consumer, together with all of the information has the effect of causing the period for withdrawal to run from the day on which the contract is first concluded. Otherwise the time limit for withdrawal does not begin to run until the day on which the consumer receives this information.

Borrowing rate

If the borrowing rate is to be changed, the consumer must be duly informed on paper or on any other durable medium before the change takes effect. This information shall state the amount of the payments to be made after the entry into force of the new borrowing rate and indicate whether the number or frequency of the payments is to change. However, the parties may stipulate in the credit agreement that this information is to be given to the consumer periodically in cases where the change in the borrowing rate is caused by a change in the reference rate, that the new reference rate is to be made publicly available by appropriate means and that the information concerning the new reference rate can also be consulted on the creditor’s premises.

Obligations in connection with a credit agreement in the form of an overdraft facility

Where the credit agreement covers credit granted through an overdraft facility, the consumer shall be kept regularly informed by means of an account statement (on paper or on any other durable medium), containing the following particulars:

• the amounts and dates of drawdowns;
• the precise period to which the account statement refers;
• the balance from the previous statement and the date thereof;
• the new balance;
• the dates and amounts of payments made by the consumer;
• the borrowing rate applied;
• any charges that have been applied;
• where applicable, the minimum amount to be paid.

The lender must likewise inform the consumer of all increases in the borrowing rate or in any charges payable by him before these changes take effect.

However, the parties may agree in the credit agreement that information concerning changes in the borrowing rate is to be given in the account statement if the change in the borrowing rate is the result of a change in a reference rate, the new reference rate is made public by appropriate means and information about the new reference rate is likewise available on the premises of the creditor.

The code provides for the consumer to have the right to pursue remedies against the creditor under linked credit agreements in certain specific cases: the consumer must already have sought redress against the supplier without winning his case; the goods or services have not been provided or have only been provided in part or are not compliant with the contract for the supply of goods or the provision of services.

Where an overrun is authorised on the occasion of the opening of a current account, the agreement must indicate the borrowing rate, the conditions applicable to this rate, any index or reference rate which refers to the initial borrowing rate, the applicable charges and the conditions under which these charges may be amended.

The establishment must provide this information on paper or on any other durable medium at regular intervals.

If the overrun is significant and continuous for a period of more than one month, the institution must inform the consumer without delay of the amount of the overrun, the borrowing rate and all penalties, costs or interest on arrears which are applicable. If the overrun continues for a period of more than three months, the institution must propose a different type of credit product to the consumer.