| ECRC NEWSLETTER No.9 & BRUSSELS 2007 - Background News about the Conference; ECRC Plans for 2008 and 2009; Contacts, Initiatives and Developments; Our Websites and some recent Observations about Different Banking Cultures in Europe |
BRUSSELS CONFERENCE 2007 – ONE MONTH TO GO!
Less than 30 days separate us from our next international meeting in Brussels where all efforts manifest in the national conferences will merge into a visible representation of stakeholders. 60 persons whom we addressed directly representing consumer organisations, social welfare organisations, banks, science, alternative financing institutions and politics will discuss the issues of the conference with each other. We thank them for their dedication and the support of their organisations. We are also very grateful to Citigroup, Deutsche Bank and GE Money that they make this international dialogue financially possible and participate in our discussions. Simultaneous translation will be provided into French and English and 150 people are expected to participate from all over the world. (Register now for the remaining places).
You will meet people from all EU member states and the USA as well as from Brazil, South Africa, Japan, Canada, and Albania. This diversity has induced us to put participants into a more active role. They will be equipped with an electronic voting device which sorted ac-cording to sector and origin will allow the audience to express opinions on various issues discussed on the podium. This will be particularly appropriate on the morning of our first day when stakeholders of financial services from many countries will use a parliamentary type hearing to tell us about their concerns, actions and successes. Those who have held a domes-tic conference since 2006 will present a short report on its contents, followed by other country representatives sharing their views on national developments and preoccupations. All are in-vited to give us this information in advance in a written form so that we can post it onto the Internet in different languages. The national reports will be short and broadly arranged in the following way: a) Information on the conference on responsible credit - where appropriate b) What are the most pressing problems in credit and debt in your country? c) Who is active in coping with these problems? d) What kind of solutions have been developed e) What do you expect from an international network for your country? If your country is not represented on the podium we would nevertheless appreciate if you could provide us with such a paper in either of the six languages of our websites (en,de,fr,it,es,pt) in order that we can make our information more complete.
This time round, we can announce the active participation of the European Commission (DG Market and DG Social Policy) as well as the Economic and Social Committee, the European Parliament and the Council. Our Round Table on the implementation of the two important Di-rectives on Consumer Credit and Payment Services should ignite another round of discus-sions at the national level showing the challenges, loopholes as well as threats that these European legislations pose to all of us. A recent research piece on the procedures through which these Directives were created would have made interesting background reading had the author been able to attend the conference. Is maximum harmonisation the new drive or will national culture play a more prominent role?
The afternoon of the first day will be dedicated to the most pressing concerns: Over-indebtedness and Insolvency, Credit Card Credit, Financial Education, Scoring, Microlending, and Non-Performing Loans including Credit Insurance. We can assure that the most knowledgeable persons from the different sectors will be there and that a balance between information and opinions will be sought.
The second day will be dedicated to ethical and moral principles in financial services and their relation to law, marketing and collective action. While state, industry and consumers seem to favour principles over the law their function and use has to be investigated. Within our workgroups in our break-away sessions, we want to be more concrete on the ECRC principles with regard to existing law and the requirements of the implementation process of the Directives. This discussion will then proceed to the session dedicated to exchanges by alternative types of financial institutions on what is the most appropriate form for corporate social responsibility, before we close the conference with voting on the future of ECRC, its conferences, websites, structure and activities.
But above all, meeting interesting people, net-working and information should be a core inter-est for this conference. This is why, despite budgetary constraints, we still find it important to offer an impressive evening event consisting of an ambiance dinner and a magnificent Jazz-band which may once again lead to some dancing within the walls of this marvellous last cen-tury cinema palace which is the Albert Hall. We will mark the languages you speak or under-stand onto your name badge so that others can either address you or ask you to translate for them. Globalization should not become a business of English speaking experts but concerns us all.
If you want to profit from the Brussels event to meet peers from other countries or if you have special projects or activity which you would like to discuss with interested people, we can help you by alerting others of these. For example, a Japanese delegation will be meeting some ECRC members on the Thursday evening, and we have been asked to make a meeting room available at 9am at the conference centre venue on the Friday morning (before the 10am start) for those doing research on cross-border selling of financial services. Just tell us if we can be of help, and let us know if you wish to join an in-formal get-together at a restaurant yet to be confirmed on the Thursday evening.
BANKS AND THE SOCIAL DIALOGUE
The Brussels 2007 conference designed as a stakeholder parliament is also a mirror reflecting attitudes in the banking business. Private American and German banks seem to be much more open to a critical dialogue with stake-holders than English and French banks or public banks in general. Whereas bankers in the UK, together with the State (DTI, OFT, FSA), seem to have defined an own social policy approach strongly related to free market ideologies (e.g. financial capability, consumer information, competition and education) where stakeholders either play the game or are largely ignored. This English influence is already visible in countries like the Netherlands, where incidentally, ECRC relations with the major Dutch banks are slowly developing in the right direction, which is in contrast to the two giants in Switzerland that do not bother with small problems. They look at investors and understand corporate social responsibility as a form of providing ethical conscious-ness on a more abstract and less costly level. In France, bankers seem to be convinced that they alone can define and announce what is social and responsible. This means that a dialogue, for them, is more about a process of teaching the public about modernity and what social responsibility should be. For the rest, they point to alternative institutions and the State. This comes close to the attitudes of the European savings banks sector where most assume that they have a chartered responsibility and can discuss this among themselves and with leading politicians only.
We have much sympathy with such social conservative attitudes that accept responsibility and effectively try to observe ethical standards with the associated beneficial results for the poor. But we are afraid that this model will not persist, and that after its gradual or sudden disappearance (see the privatisation of financial services of the post offices), all that may remain could be an ethical desert. We have to think ahead and replace fading (national) state authority through responsible market forces in the globalization process.
We are therefore also very disappointed that the quasi-monopolists of the Credit Card Industry VISA and Mastercard, whose policies offer per-haps the most feared form of a future (i.e. over-indebtedness and dependency), turned down our offer to discuss this with us on the conference panel dedicated to the issue, though they may yet send a representative to attend the event in a more passive way. Given their nearly unrecognised political success with the liberalisation of the credit card credit market and their unwillingness to look for answers to the rising credit-card credit burden in overall overindebtedness in the UK, USA and countries like Brazil, India or South Africa, NGOs may need to be-come more expressive with the likes of such immaterial institutions. They exist in the form of an abstract banking sector with no own bones but an enormous appetite (NB: VISA is an “association” of more than 21,000 banks, it is sponsor of the Olympic Games since 1986 and issues 1.2 billion credit cards, a significant share of which play a role in the devastating small credits harming the social well-being of millions of debtors. The biggest New York debt counsel-ling agency BUCCS welcomes visitors with a giant bottle of cut-up credit cards from overindebted consumers)! Our podium discussions and the inaugural statement will point to some of these challenges and question the way the legislator treats this collective form of capitalist money interests with its headquarters in London.
NEXT CONFERENCE
With 17 national conferences to look back on over just the past couple of years, and the enormous knowledge and political discussion in financial services which they have generated, and despite us being in the middle of preparing the 2007 Brussels meeting, we must nevertheless already think about the future. There is first, the continued holding of national conferences. The date for the German 2008 confer-ence, for example, has already been fixed for the 6th and 7th of June 2008 in Hamburg. The hosting of the UK conference will move from Scotland to Cardiff in Wales. The Washington conference will be held in March 2008 as usual, and ECRC’s Dutch member organisation NVVK will celebrate its 75th anniversary in The Hague on November 8, 2007, a large event in which ECRC will be presented. The Berlin conference of the Law & Society Association in July 2007 got about 30 marvellous scientific contributions from India, China, Japan Australia, Brazil, South Africa, USA, Canada and many European states on consumer overindebtedness and the law. A selection of papers will be published in 2008 and outstanding speakers like professor Gregory Squire, Tony Williams and Iain Ram-say will introduce their findings into the Brussels conference. The close collaboration between ECRC and such respected scientists who con-cern themselves with our issues, will be deep-ened in the future, and help fulfil our hopes to bring together practice and theory in such a way so that it makes our stress for responsible credit more effective and allows new regulations to get the necessary input. We are really happy to help with suggesting and providing competent speakers for national events as we have done on several occasions in the past.
The next Brussels conference is scheduled for 2009 as far as iff’s capacity is concerned. But this does not mean that there will be no ECRC international conference in 2008. We urge those who plan a national event to declare their own conference as the venue for the next central ECRC stakeholder conference. This would get our central event rotating every second year through Europe. We assume that iff will be able to help with the sponsoring and organising of such an event. It may even be a very good opportunity for those who still have difficulties in financing it on their own to receive support and raise their profile as well. Particularly worth looking into for candidates wishing to host the next conference is the EU DG Sanco offer to support networking activities for 2008, which requires an immediate response as a request has to be made before September 25th of this year. If you plan to shoulder such an international event, please contact us best before the Brussels conference. We need more than one candidate to be able to choose from.
EUROPEAN REGULATION
The most striking event as regards our principles of responsible credit is the recommendation CM/REC(2007)8 of the Committee of Ministers to Member States on Legal Solutions to Debt Problems (adopted by the Committee of Ministers on 20 June 2007 at the 999bis Meeting of the Ministers’ Deputies). It covers most of our ECRC principles and overwhelmingly asks for solutions that are very much in line with our own commitments. Finan-cial education has to focus on consumer rights and not only adapt consumers to the system. Credit should be responsible. Lenders should participate in the development of prevention and rehabilitation for overindebted consumers. Families should be protected, guarantors should get equal rights, debt collection should be limited with regard to the adverse social effects, discharge should be generalised in Europe, and independent debt advice should be developed and guaranteed in all countries. We have translated these principles of the Council of Europe into German and made the English and French versions available on our internet site. We have invited the Council to speak about these recommendations at our Brussels conference on the panels dedicated to discussion of the Principles.
The hearing at the Economic and Social Committee on June 25th brought forward a statement on the prevention of overindebtedness in Europe which will be passed by the end of this year. It can serve as a policy paper for national implementation of the Directives. As far as the Consumer Credit Directive is concerned there is some confusion about the procedure. We heard from the Commission that contrary to earlier statements the Directive has not yet passed the Council. It is still not avail-able due to problems in translation but we will hopefully get it in all languages before our conference starts. The European parliament seems to be divided on its attitude. The economic and social committee will discuss it in the second reading and some say that deputies are sceptical about its necessity especially as its regulation has remained so vague and with little impact on those problems which the deputies are confronted with at home. Some say that the deputies are just tired of it and will pass it as quick as possible (which would shed a strange light on our European democracy)
As to the Payments Directive the Commission has clarified that it truly opens the continental European consumer credit market to all kind of financial companies who only have to hide their questionable small-size loans in the form of a credit card in order to mail them to there Euro-pean-wide customer base. Local and small banks unable to profit from this easy way of credit will suffer from these new market en-trants, players which could gradually lead to customers being dependent and unfit for ordi-nary instalment or overdraft credit, as is already the case in the US. Many bankers have re-vealed to us in our discussions that they have not been aware of this fact, despite ECRC high-lighting it two years ago without any reactions. The misrepresentation of this Directive as a means to facilitate cross border payments in-stead of promoting credit cards has truly worked well. In the national implementation process, which now requires the bank supervisory acts to be amended, some parliaments may be sur-prised to find out how little they still have to say in their country.
NETWORKING
In some countries the ECRC has brought together NGOs which had not necessarily seen each others as partners working on the same subject in the past. Networks are useful for political effectiveness and the exchange of information. The example of the International Association of Insolvency Regulators is such a net-work. Its Australian member wrote to us: “The IAIR has existed for a number of years now. It is an association of Government organisations responsible for bankruptcy policy and regulation. It provides a useful network for Government agencies with this responsibility to share information and ideas. There is an annual meeting and the association also prepares comparative reports on issues of interest to members. There are currently over 20 countries who are members of the association. So far, there are very few European countries who are members of IAIR (only the UK, Ireland, Finland, Czech Republic, Latvia, Russia and Serbia). The IAIR is always looking to expand its membership and would be very pleased to increase participation from Europe. The next meeting is in Bangkok from 2-5 September 2007” (www.insolvencyreg.org). We also know of an active network of consumer ombuds of the Scandinavian states who meet on a regular basis. Such networks develop through national and local initiatives, which are preferable to the creation of supranational top-down networks, which by their selection and financing are often too close to supranational political bodies with own-vested interests.
PRINCIPLES
The recommendation of the Council of Europe proves that our principles of responsible credit are developing into a yardstick for regulation and product development in consumer and mortgage credit. Some of our members have started to initiate a worldwide discussion on the way the principles on responsible credit could be made operational and thus able to serve for national regulation purposes. The first initiative concerns the right of withdrawal and its relation to free choice. Economists, lawyers and practitioners are discussing an alternative to this quite inefficient and unsatisfying element of the new Directive as well as some national legislation which are mainly used to justify free distribution of predatory products rather than creating the de-sired effects. The reasons are analysed by using insights on default options from the field of behavioural economics as well as comparative studies on the law. Though a new model is emerging, discussion remains internal on a closed area on the responsible-credit website. However the authors from the UK, Canada, Belgium and Germany invite others to participate, and will soon make the whole discussion publicly available. Among the next issues to be discussed will be a unified EU consumer bankruptcy system which offers creditors as well as debtors the same opportunities in the common market. This is something which is presently falsified by systems that range from unlimited prosecution in Spain to immediate discharge in France, already creating a form of bankruptcy tourism.
RESPONSIBLE CREDIT WEBSITES
Have you recognised the “Input” button at the top of our websites? We would like to have more partners in the authoring tool. The number of active users of the tool has at least been in-creasing, and the team is currently made up of contributors from France, Belgium, Netherlands, Germany, Italy, UK, US and Canada. The former Italian website now covers Italian, Spanish, and Portuguese, and we are encouraging our Brazilian friends to contribute all texts in their respective language. This offer applies for all other languages too. Simply give us your text in the language of your country with a simple Header in one of our Website languages so that we have a starting point. The next step will be to have more people dedicate an hour per month to translation, which will then be checked by others who have this language as their mother tongue.
We have started building a section on best practices but the material is still with us. We will hopefully get more information in the future so that from 2008 onwards we will be able to nominate prize winners for responsible credit. Your contributions on suggesting products and services with positive characteristics which you may have observed on your national markets, are very important.
In the current climate and reports of a “credit crunch” affecting far-flung reaches of the globe, it is important that we continue our focus on engaging market participants and regulators on getting the basic building blocks of credit markets right through responsible financial services. Greater financial transparency will only do so much to help.
UR – August 2007 |
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40015 |
| Author(s): |
iff |
| Publication date: |
20/08/07 |
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Created: 08/08/07. Last changed: 20/08/07.
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