Report from the Responsible Lending Hearing organised by DG Markt in Brussels on Thursday 3 September 2009.
ECRC summary
The Commission services should be praised for having held such a consultation on such a subject of great interest to the members of our coalition. The ECRC has been organising conferences with the very aim of discussing such issues of responsible credit and fair finance for some time and the Commission has not been behind our efforts to do so in the past few years. Although staff from DG Internal Market has been involved on panel discussions at our international responsible credit conferences, and have been the organisers of this impressive hearing, why has DG SANCO not been behind our efforts at ensuring better consumer outcomes for those potentially subject to detriment when financial service markets are not sustainable or fair. Why is it, if the Commissioner Kuneva and Ms Minor from her DG, who both played a role in this hearing, project the impression that they are interested in these issues if she has refused to support our appeal for participation and support for our events. We will approach her and her services again when the next opportunity presents itself.
The conference was well attended, and though no refreshments were available, the room was almost full and the Commission should be thanked for having covered the costs for some of the stakeholders from the consumer side to be present. Nevertheless, we strongly regret the lack of transparency in who was attending as no participant list was provided, even upon request (though apparently this list will be posted on the consultation website soon). What was certain is that consumer representation on the 3 panels on the day was unsatisfactory and a reflection of the overall state of affairs for consumer representation more generally within the EU institutions bodies in charge of oversight and consulting.
What also marked this event is the lack of participation in the audience from a number of different stakeholder groups which the ECRC has a tradition of always involving and relying on to make the exchanges real and practice-based (such as debt advice and social organisations as well as NGOs beyond the mere strict formal consumer representative bodies and the host of providers and their lending association lobbyists. Nevertheless, some capable and knowledgeable persons spoke to the floor and we will try and present a short summary of some of the salient features of what some of these speakers said. Present at the Hearing on behalf of its members, was ECRC Chair Udo Reifner and Head of Coordination Sebastien Clerc-Renaud. A number of ECRC partners were however present such as supporters from RFA, ASB, ADICAE, DECO, NIBUD, SKP and many more
The consultation responses should be available soon on the EC website. (Though what wasn't clear is that despite the deadline of 31st for responding to the consultation, several EC staff including Commissioner McCreevy Said that more responses will be coming subsequently)
REPORT OF THE DAY
9.30am McCreevy
HE confirmed that irresponsible lending was in the EU too, and warned that we should be prepared for when banks have recovered from the shock they are going through and when they start lending again in the next upswing. He explained that the strategy of concentrating on disclosure was at advanced stage giving the example of the ESIS and how one of the key messages from work on it is that information on risks is important to borrowers.He gave one example of where Action is seriously envisaged and that is to impose higher capital requirements on banks when these are doing their lending in foreign exchange denominated currencies (another suggestion is to have lower LTI or LTV for these loans). The reason given was that often borrowers did not have the level of savings to cover for bridging the loss from any fx risk. He then went on to say two truths:
1) it is difficult to assess the risks for large loans
2) responsible lending is not just about the period of signature of the contract (saying that foreclosures should be avoided at all cost due to the contagion effects they cause)
After saying that he went on to say that responsible lending was not a substitution to financial education, proud and full of praise for all the initiatives related to financial education and literacy that have been launched by the Commission, while admitting that he was not naive and that he knew that national regulators think differently than placing all hopes on financial education like him. Alas he concluded his speech by saying two things we we find disappointing:
1) consumers need to know the techniques for assessing the suitability of the products they have to choose from
2) unless financial education efforts continue we will get another crisis!
discontinued..... The official summary of the seminar from the European Commission is available below:
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http://ec.europa.eu/internal_market/finservices-retail/credit/responsible_lending_en.htm
Responsible lending and borrowing
Hearing
A public hearing on responsible lending and borrowing was held in Brussels on 3 September 2009 to discuss with stakeholders the most appropriate policy responses to the challenges faced by borrowers and the financial services industry, and to draw together the main conclusions from the consultation.
7.10.2009 Summary of the hearing
10.9.2009 Webstreaming of the hearing, morning & afternoon
Participants
Presentations & speeches (in the order of the programme)
Selection of submitted views:
ECRC consultation response paper
ECRC website entry
BEUC consultation paper
ECRC partner Ireland: FLAC consultation paper
ECRC partner France: INC consultation paper
Consultation
15.6.2009 Consultation on Responsible Lending and Borrowing in the EU, closed
Press Release, IP/09/922
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