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THE Consumer Credit Directive came into force on 1 February 2011.

The EU laws drove from Brussels to the UK right through all our existing consumer legislation, forcing improvements to some but actually making others less strong overall.

"The implementation of the Consumer Credit Directive will help strengthen a culture of responsible lending," Edward Davey, minister for consumer affairs, said at the time.

"With new legal rights for consumers and greater responsibility for lenders, consumers will be better able to take charge of their money."

Is that really true? We take a look in this guide.

Six things you should know

1. More (and less) information on interest

The Consumer Credit Directive states that lenders are required to provide a 'representative example' of the cost of credit.

In the first instance, this meant that the way the 'representative APR' is calculated changed slightly to include mandatory fees and charges.

For example, a card with an annual fee of £75 (and a 19.9% p.a. standard variable rate) saw its representative APR increase from 32% to 34.5%.

Second, CCD rules stated that the representative rate should be available to at least 51% of applicants.

Before that, 'typical' APR meant that at least a third should receive the rate as it was advertised.

How useful?

The representative APR is still based on the most common 'draw down method' (or in plainer English, transaction).

For credit cards, the most common draw down is purchases. But credit cardholders are under no obligation to use their card for purchases: the 'representative' rate doesn't include the cost of credit for balance transfers or cash withdrawals, for example.

Just as before, then, it hardly represents the cost of borrowing for every user.

The 15% drop in the number of applicants who can actually access the representative rate is even less useful.

Before February 2011 it was already widely suspected that lenders strayed significantly from the 66% rule since they were unable to predict the standard of applicants accurately in advance and they work on a principle of risk-based pricing which takes into account the applicant's credit history.

Now that they're often suspected to be straying from a 51% rule, then, this law has undoubtedly made the credit market more confusing.

"This is a backward step," said Vera Cottrell, policy adviser at consumer group Which?.

"Fewer consumers will be guaranteed to get the rate advertised. But there's nothing we could do about it because it was agreed at EU level."

2. Increase in 'section 75' protection

On a brighter side, the legislation did add more help for consumers using one of the most widely used protection laws: section 75 of the Consumer Credit Act 1974.

Under that law, when cardholders make a credit card purchase or purchase through a borrowing agreement between £100 and £30,000 the lender and the supplier (whoever you bought from) are equally responsible for making sure that they're provided with the good or service.

Under the Consumer Credit Directive, the same protection will apply to transactions from £30,000 to £60,260 too.

How useful?

Day-to-day, our current section 75 legislation seems adequate to protect credit cardholders and even those with personal loans. Though the extra protection on larger amounts is welcome most of us are unlikely to ever need it.

See this article for more on how section 75 works.

3. More information on applications

Under the Consumer Credit Directive, lenders are required to inform consumers if their application for credit has been declined on the basis of information obtained through a credit reference agency, even if it was only partly declined on that basis.

More than that, they'll have to specify which credit reference agency is involved and provide the consumer with their contact details.

In the overwhelming greyness of the directive this is one aspect which is black and white: "failure to do so is an offence for which the penalty is a fine."

The Consumer Credit Directive also doubled the cooling off period for credit cards and loans to 14 days.

That's a fortnight for consumers to change their minds after making an application for credit.

4. Right to a draft credit agreement

From February, consumers will have the right to request a copy of the draft agreement before signing up for a credit product.

Credit providers will also have to provide standard (or 'pre-contract credit') information but, other than the format, that differs little from the current summary boxes which lenders provide before you sign up.

5. Right to notice of interest rate increases

The Consumer Credit Directive states that borrowers must always be notified of changes in interest rates and that this should generally be done in writing before the change takes effect.

Association for Payment Clearing Services (APACS) standards says lenders should give you 30 days notice of interest rate changes but this is a guideline, not law.

It's not much but it might give consumers more notice when they're being rate-jacked.

See our interest rate re-pricing feature for more detail on how effective information on increases is.

6. Right to overpay on personal loans

It used to be tricky to overpay on a loan each month to pay the debt back more quickly - borrowers had to pay the whole amount or stick to the originally agreed payments.

Now, providers must let consumers overpay though they can charge up to 1% of the extra payment in fees (or 0.5% if the loan has less than a year left to run).

See our full loan repayment guide for more information on these rules then and now.

A short disclaimer... Until the lenders implement these changes in full it's difficult to make broad statements about the impact they'll have - above is our best attempt so far!

What the law says and what actually happens are two very different things. For an example of this just take a look at section 75: in theory, lender and supplier are equally responsible when you don't receive a good or service.

In practice, going to the credit card provider is consumers last resort, trying to resolve it with the provider first and is likely to be met with difficulty, at best, and, at worst, complete indifference.

We'll be keeping tabs on the Consumer Credit Directive so check back to get the latest.