USURY and OVERINDEBTEDNESS - English Government without power over illegal Credit Extension! Elaine Kempson (PFRC) argues in her report to DTI that high interest rates would fill the gap and lure overindebted consumers away from the uncontrollable illegal credit market.
EU attributes second project on defining overindebtedness to bank institute and PFRC and a French bank institute. |
ILLEGAL CREDIT EXTENSION - IS THERE NO OTHER MEANS OF PREVENTION THAN INTEGRATION?
While illegal credit markets are a question of law enforcement, police and supervision in most countries on the continent, and while one can say that these problems are successfully coped with by the credit authorities in the old EU-member states (as the emergence of such practices are a cause of concern in the new accession states), the Department of Trade and Industry in the UK obviously seems to assume that legality can only be efficiently enforced when it comes to theft and fraud by individuals, but not when it comes to illegal activities lenders. Elaine Kempson who in different letters and statements has turned into one of the main supporters of free credit markets without usury limits in the EU, supports this form of strange neo-liberal policy argument with seemingly empirical research that compares UK reality without credit regulation with an imagined UK reality where usury ceilings apply. Such form of empirical research is fairly new in sociology and more prevalent in the realms of politics.
If continental lawyers think that this kind of policy is a typical English problem, they should carefully study the behaviour of leading English banks on the continent. An example of this is Royal Bank of Scotland which distributes a seemingly free credit card to people in Germany and elsewhere which after a certain while turns into high price credit with certain inbuilt tricky characteristics e.g. cash withdrawal with this credit card will cost an extra fee of up to 4.75% for those who have no assets on the credit card account (and who does?). This aims at people in trouble with debt, who are tempted to use the credit card as a means to take out an instalment loan., which in this case means that the interest rate in even countries like Germany, France, and the Benelux can climb up to 35% p.a. if it is for a small amount and the sum is paid back in a short delay. This is an ingenious circumvention of continental usury regulation as well as a breach of the price disclosure rules of the EU, which seems to be something legal in the UK.
Why the British government still thinks that overindebted persons, who are under strong pressure to take up additional credit but lack ordinary bank accounts or access to affordable credit, ought to be the core target group for free market ideology, borders on almost religious belief. To cope with poverty means first preventing unscrupulous lenders from exploiting it yet further, with high rates, special fees and unacceptable methods of distribution. Not preventing these practices will only mean that the tax payer will end up paying the bill.
ECRC invites the English government to join a common effort with other governments to study the effects of "non-regulation" of the credit markets in different countries.
DEFINING OVERINDEBTEDNESS: PROJECT ATTRIBUTED TO FRENCH BANK INSTITUTE OEE BY DG SOCIAL POLICY
There is also a need to worry, because this same Personal Finance Research Centre of the University of Bristol which Elaine Kempson represents, has been awarded the core EU-Project on overindebtedness in Europe together with the lead institution, the bank sponsored Observatoire Européennes des Etudes (OEE) in Paris.
This institution is unknown on the Internet but OEE is in fact called Observatoire de l’Epargne Européenne and has no reputation in research on overindebtedness and consumer credit. According to what the website says, it presents itself as follows:
"The OEE (European Savings Institute) association regroups major financial players. Its activities consist mainly in:
• financing research projects on European savings
• developing an original database
• providing with a forum and a discussion platform
• informing press and general public on savings related questions"
Our website already reported on Prof. Babeau, the head of its advisory committee, who appeared on a French Cofinoga publication together with researchers (who later said that they had been misused) where he fought against usury ceilings in France. DG Social Policy seems to join this creation of a quasi “European Coalition for Free Credit Markets” backed by empirical researchers (which as we previously experienced in the USA when Ronald Reagan stopped all independent research on overindebtedness, only for the bank sponsored Purdue Institute to step in), lobby institutions renamed as research, financial players, some government agencies and individuals.
Already the task of this project defined by DG Social Policy has little concern for the freedom of sciences. The research gets the task to deliver a unified definition of overindebtedness to DG Social Policy, which then wants to draw statistics which lenders, state, social science and social organisations as well as creditors and insolvency institutions should agree to. Not only has this same proposal been written out by DG SANCO in 2000 and the subsequent report delivered in 2002 appearing as a complete mystery unknown to DG Social Policy, this project has also been prepared by an advisory committee where again Elaine Kempson, as well as another member of the group that was given the project, were present, and seem to have received the information necessary to understand what DG Policy truly has in mind. This is not truly the way how research grants should be attributed. (In a parallel case iff was previously contradictingly told by DG Market that it could not be involved in tenders as long as it would be part of the Fin-Use advisory committee, which among other reasons led to its early resignation). In two other projects, it would appear that a previous close relation between the Commission and potential bidders on the core issues of the tender had led to their final success. The enormous bunch of bureaucratic requirements which actually lead to the exclusion of small research institutes that cannot permit themselves to work for the EU waste boxes and which were designed to exclude corruption have finally led to a quite new form of procedures where on the surface a purely formal procedure appears to take place while in the background insider groups get closer together in order to be sure that nothing can happen.
EU-CONSUMER RESEARCH DRIED OUT
EU-Consumer Research is increasingly attributed to banks, bank sponsored "researchers", to bank consultants or to entities that have no experience at all in consumer research. None of those consumer research institutions who led the basis for the successful EU consumer regulations in the 90ties (like CDC, SWOKA, INC, iff, view or others) are still active. Independent European consumer research has been dried out by this wave wherein consumer issues are seen not as social but as technical questions. |
| ID: |
39184 |
| Author(s): |
iff |
| Publication date: |
06/12/06 |
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Created: 05/12/06. Last changed: 30/01/07.
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