The Consumer Credit Directive was
finally adopted by the European Parliament on January 16 2008 and
received Council approval on April 7. After more than five years of
uncertainty, the finance industry must now prepare for yet another
round of reform, but does this include the leasing industry? 

First, the good news. The directive is broad in its scope, but
it specifically excludes hiring and leasing agreements where there
is no obligation on the hirer or lessee to purchase the goods. So
those in the industry who only enter into hiring or leasing
agreements can breathe a sigh of relief (perhaps). But
conditional-sale agreements would appear to be covered by the
directive, whereas, on the face of it, hire-purchase agreements
will not be covered because they contain an option and not an
obligation to buy the goods. 

The implementation of the directive into UK law will be overseen
by the Department of Business Enterprise and Regulatory Reform
(BERR). 

The directive provides for maximum harmonisation. This means
member states will not be allowed to maintain provisions other than
those in the directive. But this will only apply when a harmonised
provision exists. This leaves room for flexibility by member states
because, where the directive does not legislate for a matter (for
example, hiring or leasing), the member state is free to legislate
as it sees fit. 

This level of flexibility, and BERR’s interpretation of the
directive, will largely dictate how the directive is implemented in
this country. So, although hiring and leasing are excluded from the
scope of the directive, it is too early to say whether the
implementation of the directive might impact on hiring and leasing
in other ways. It seems unlikely hiring and leasing will not be
regulated. But it is unknown what form any regulation will take –
the status quo, separate regulation or added to credit
regulation? 

The directive will regulate all consumer credit agreements from
€200 to €75,000, but, in addition to excluding hiring and leasing
agreements, it also specifically excludes agreements for business
purposes, mortgages, certain employer-to-employee loans,
interest-free loans, loans of up to three months with only
insignificant charges, overdraft facilities repayable within one
month and pawn agreements. 

Finally, that all-important question of timing. Member states
have two years to incorporate the directive into national
legislation, so we can expect to see it on our statute books in
April or October 2010.