Britain and Germany were outgunned on Monday in their bid to retain national leeway in new European Union rules to make it easier for consumers to shop around the 25-nation bloc for a cheaper personal loan.
The legislation, which updates 20-year-old EU rules, will give consumers more choice when they need a loan to buy such items as a car or a washing machine by encouraging competition among lenders.
Critics said some existing national rules gave consumers better protection but current EU president Austria said a broad majority clearly favoured full harmonisation and a working group would be set up to take the legislation forward based on this.
The rules will lay down how the annual interest rate on a loan should be calculated and presented to consumers, and how much lenders should be compensated for early repayments.
The European Commission, which drew up the directive, has tried to straddle two camps with a mix of bloc-wide rules and flexibility to retain national rules for some aspects.
The majority of EU states told a meeting of competitiveness ministers on Monday that such a mix would be a recipe for legal uncertainty, dismissing pleas from Germany and Britain.