Europan Consumer Law A Different Perspective Labour and Consumer Credit Law could help to Create Eur

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Europan Consumer Law A Different Perspective
Labour and Consumer Credit Law could help to
Create European Social Contract Law

• Paper presented at V Curso Jean Monnet
  Integración Europea y Derecho Privado
• Universidad de Santiago de Compostela
• April 24, 2007by
• Prof. Dr. Udo Reifner
• University of Hamburg/Institute for Financial
  Services, Hamburg Germany

EuSoCo www.responsible-credit.net
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T-E-S-I

• Threat Consumer Law as a Pacemaker for free
  (Internal) Market Law
• Example Consumer Credit - Free Choice and
  Overindebtedness
• Solutions Consumer Law and Social Justice
• Idea European Social Contract Law

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I. EU - Consumer LawThe Example of EU Credit
Legislation

• 80ties Convergence of National Law/Min. Harmon.
• Draft Mortgage Directive AmBlEG C 42, 1985
  (Proposal)
• Consumer Credit Directive 87/102/EU 1986 (Cost
  Disclosure Early Repayment, Payment Instruments)
• APR (Formula) Directive 90/88/EU 1990
• APR(365,25 days) Directive 98/7/EG 1998
• 90ties Taming Economic Power/26th Reg. Max
  Harmon.
• CCD Overindebtedness Directive (March 2000)
• Electronic Signature (2000)
• Mortgage Recommendation (2001) Standardization
• 00ties Information Only/Mutual Recognition
• Third Banking Directive Bank Supervision (not
  credit)
• Distant Selling of Financial Services (2002)
• Free Services Directive EP Amendmends 2004
• Payment Directive 2007 (Credit Card, Finance
  Companies)
• Consumer Credit Directive 2008
• Rome I Directive 2007
• 10ties? European Contract Code (Aquis
  Consommation)

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EU - European Contract Code (EP/Com)

• International Trade Law
• Unidroit, UN Sales Law, Sales Law Directive,
• Principles of European Contract Law (PECL)
• Trento Project, Lando
• General Contract Law
• Restatement of Contract Law (Common Law Approach)
• Consumer Acquis DG Sanco Project (Münster)
• Consumer Sales Law Directives
• No labour law, no financial services, no tenants
  law
• No longterm contracts
• Social Justice Group
• Manifesto for more Social Elements in European
  Contract Law
• Sub-Group EuSoCo (European Social Contract Law)
• Labour Law, Tenants Law, Consumer Credit Law

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II. Example Consumer Credit - Free Choice and
Overindebtedness
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Small Cosumer Credit by Income StrataEVS-Sample
2003 (from 0 with Overdraft)
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National Credit Legislation

• Consumer Protection
• User Information

• Debtor Protection
• Bankruptcy/Social Welfare

Income Protection
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EU- RegulationChoice "What You See is What You
Get"

• Information "Proof and Warning"
• Disclosure of Credit Costs "Complete and
  exhausting
• Cost elements if separable and can be bought
  elsewhere
• Annual Percentage Rate (APR) "Correct and
  integrated price disclosure
• One price doctrine
• Standardized Disclosure

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Time, Advice and Education

• Right of Withdrawal "Time for reflection
  offre préalable, information at an early stage
• Independent advice Trust and Liability
• Financial Education
• Financial Literacy (school)
• Client Education (banks)
• Product Knowledge (banks and schools)
• Professional Education (vocational schools)
• Financial Education from a user perspective
  (school, consumer org., banks)

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National RegulationAccess Responsible Credit
for All

• Finance Companies (UK 200 APR)
• Specialised Commercial Banks (cross selling,
  refinancing, pyramiding EU)
• Public banks
• Savingsbanks (D), coop banks (D,F), credit unions
  (IRL)
• Volkskrediet (NL)
• Microlending (F)
• Legal Obligations (minimum bank accounts) (F,B,D?)

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Prevention Overindebtedness omitted

• Responsible Lending?
• Usury "The double is enough"
• Debtors in Default - "Encourage Credit
  Adjustment, Discourage Credit Break"
• Refunding of unearned interest - "Only Time is
  Money"
• Anatocism - "No Interest on Interest"
• Default interest and cancellation fees - "Recover
  no more than your true damages"
• Limitations on refinancing - "Do not profit from
  others misfortune"

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Protect the Overindebted

• Hazardous debt collection
• Repossession - Limitations on private means of
  selfhelp
• Life-line limitations - The right to a descent
  life
• Cheques, Bills of Exchange and Promissory Notes -
  The judge remains in charge
• Exemption Laws
• Consumer bankruptcy - The right to rehabilitation
• Protection against Cancellation and Acceleration

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Remedies

• Small Credit Credit card credit and Payday Loans
• Linked to overdraft credit
• Overdraft
• Small gets big
• Linked transactions
• Financed Investments damages, withdrawal,
  disclosure
• Financed goods and services Creditor and
  Salesmen have joint liability
• Cross-Selling one price doctrine

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III. SolutionsConsumer Law A Dead End?

• The poor pay more, get less and are partially
  excluded
• Existing consumer law is empirically ineffective
  with regard to these problems
• Neo-liberal consumer law principles enhance
  markets also to the detriment of consumer
  protection
• Spot Contract Ideology for long Term Relations
  (incomplete contracts)

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Social Justice Manifesto

• Critical
• denounce the ideological impact of the
  information model.
• Consumer
• Drive information and choice to its ends -gt
  advice, education and legal representation
• Welfare
• Regulate the outcome (discharge, rate caps etc)
• Good Faith
• Case by Case, judges democracy

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IV. EuSoCo European Social Contract LawLabour
Law, Consumer Law and Tenants Law
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Some ideas on the Relation of Consumer and Labour
Law

• Work together
• Why? Social Contract Law
• How? legal Sociology
• Labour Law and Consumer Law are different
• Labour law is collective consumer law is
  individualistic
• Consumer protection relies on markets, labour
  protection on the state
• Workers are suppliers, consumers are users
• Consumer Credit A General Concept for
  Contracts?
• Credit and Rent economic contents and legal
  form
• labour, tenant and now consumer credit
  contract purpose driven
• service loan rent contract form driven
• Protection vulnerable consumer (children)
  and labour slaves
• Social Contracts as Credit Relations
• What can be learned?
• Modernisation of Labour Law
• Socialisaton of Consumer Law

Consumer Law
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Why? Social Contract Law

• Consumer and Labour Law are in a Deadlock
• Neo-liberal Deadlock of Consumer law
  Information and Choice
• Paternalistic Deadlock of Labour law Exclusion,
  Corporativism, fading unionization
• Credit and Income merge
• Borrow your future Income
• Dependancy shifts from Labour to Credit
• Overindebtedness and Unemployment merge
• Exploitation shifts from wages to interest
• A Society of Two Thirds menaces Market Capitalism
  
• Labour law experience with social reponsibility
  consumer law with individual freedom

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How to Achieve Social Contract Law

• Sociological Research
• Consumer (just as labour and tenants) Law prove
  the Failure of Contract Idelogy -gt false
  abstraction from needs
• New bounded rationalities that incorporate more
  of social reality
• Legal Goals
• Search for (Social) Justice
• Rule of law instead of Economic Analyse of Law

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Some ideas on the Relation of Consumer and Labour
Law

• Work together
• Why? Social Contract Law
• How? legal Sociology
• Labour Law and Consumer are different
• Labour law is collective consumer law is
  individualistic
• Consumer protection relies on markets, labour
  protection on the state
• Workers are suppliers, consumers are users
• Consumer Credit A General Concept for
  Contracts?
• Credit and Rent economic contents and legal
  form
• labour, tenant and now consumer credit
  contract purpose driven
• service loan rent contract form driven
• Protection vulnerable consumer (children)
  and labour slaves
• Social Contracts as Credit Relations
• What can be learned?
• Modernisation of Labour Law
• Socialisaton of Consumer Law

Consumer Law
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• Thank you
• udo.reifner_at_iff-hamburg.de