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Workshop 7 "Can Risk-based Pricing Work in the Absence of Comprehensive Credit Reporting?" Abstract by Dieter Korczak
FINANCIAL EDUCATION & BETTER ACCESS TO ADEQUATE FINANCIAL SERVICES

People experiencing poverty and social exclusion usually have a limited or no access to financial services. Adequate financial services that are handled with the necessary social responsibility by the service providers are missing in most European countries.

This objective is researched and analyzed by a project group under the lead of the ASB Schuldnerberatungen GmbH (Austria) in cooperation with GP Forschungsgruppe (Germany), Association for Promotion of Financial Education (SKEF,Poland) and Observatoire du Credit et de L’ Endettement (Belgium), co-financed by the EU-Commission, DG Employment and Social Affairs.

In March a first conference in Warsaw took place dealing with this subject.
Conclusions were that there exists a big diversity of banking services and lending providers regarding the financial access for low-income people from Finland to Malta and from Iceland to Poland. Up to now there is no harmonization and it remains an open question how far harmonization should go anyway.

It is a disturbing experience that in each European Member State still people are excluded from bank accounts and credit taking. The main reasons for that are negative registrations in public or private registration offices and low income. The excluded persons are consequently people with negative registration criteria, people with low income, over-indebted persons and homeless persons.

To provide better access some necessities concerning the registration procedures were defined which could help to avoid negative consequences for those who are registered. The Belgium example seems to be at present the most favourable approach to avoid financial exclusion. It was our common conviction that everybody should have legal access to a minimum of financial services.

The adequacy of financial services was the second main objective of the conference. The working group which delt especially with this topic came to the result that there should be a codified right for a bank account with specific elements. Additionally adequate financial services should include cheap possibilities to get a credit if somebody needs one. Credit unions and social banks are already providers of cheap or cheaper credits but there should be more possibilities and good practice examples in Europe.

Adequate financial services means also responsible lending for the financial sector. How to define responsibility? The answer touches two aspects. We need standards and norms to judge responsibility and we need also sanctions for those who do not follow the standards and norms. Again , Belgium presents a good example for the way sanctions could be undertaken.

By Dieter Korczak (GP Forschungsgruppe, Institut Für Grundlagen- Und Programmforschung)

ID: 37228
Author(s): iff
Publication date: 28/04/06
   
 

Created: 18/04/06. Last changed: 18/04/06.
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