||UN conference on Trade and Development Drafts new Principles on Consumer Protection especially in Financial Services
The UNCTAD has revised its consumer protection guidelines especially with regard to financial services that until now had been omitted. The USA has called this premature since OECD and G20 are working on the same issues. The Draft is based on a survey in 2014 of UNCTAD with member countries in which only a few have participated. The new draft of the principles is in... [more...]
||PPI: UK regulator says need for continued vigilance as it gathers evidence on PPI complaints process and warns of possible further PPI intervention
The Financial Conduct Authority is set to gather evidence on current trends in payment protection insurance complaints, warning that further interventions may be appropriate. The FCA will use this evidence to assess whether the current approach is meeting the objectives of securing appropriate protection for consumers and enhancing the integrity of the UK’s financial... [more...]
||Interest Rate Caps – 78 countries around the world have caps according to the latest stock taking report by the World Bank testifying the continued popularity and usefulness of price...
End 2014, the World Bank produced a report that presents the findings of its stock-taking exercise to determine the number of countries currently capping interest rates on loans. The last financial crisis has reopened the debate on interest rate controls as a tool for consumer protection and more and more authorities have decided it is a useful tool to add to their... [more...]
||“APR-tool” – How the European Commission presents the assumed achievements of the Consumer Credit Directive 2008.
One of the arguments for Directive 2008/48/EC (CCD) was the appearance of a generally accepted interest rate for consumer credit in which the consumer can compare different offers on the market and also imagine the burden the credit puts onto his or her future. This goal, as found out in research by iff in its EU survey on insurance remuneration systems, has not been... [more...]
||Payday loans: As complaints about payday loans explodes in the UK, there is now a huge debate on whether these firms should be able to advertise in such a big way as they do (via...
Financial Service Ombudsman Report UK: Complaints to the Financial Ombudsman Service (FOS) about payday lending soared 83% last year, the third highest rise of any sector except home credit (139%) and payment protection insurance (140%). http://www.financial-ombudsman.org.uk/news/updates/annualreview-May-2013.htm Payday loans: cute and cuddly tricks can't disguise... [more...]
||Rate Caps for Responsible Credit – Finally also in the UK
ECRC co-founder Debt on our Doorstep with Damon Gibbons from the Centre for Responsible Credit launched a victory on English predatory lenders. ECRC has been involved in the development of a legal framework for the UK consumer credit market where predatory lenders had found a vast area for exploiting the poor with interest rates far above the average on the continent.... [more...]
||Credit databases – Stakeholder discussions needed on the subject of credit referencing and information exchanges following the 2011 World Bank publication of its “General Principles for...
As the policy research institute CEPS creates its policy task force on Consumer Credit Data Sharing, it is time for stakeholders to discuss what this means for consumer protection, potential discrimination etc. While credit bureaus are a key feature of responsible lending, how significant are the risks that certain features and characteristics of this element of the... [more...]
||European Commission publishes guidelines for CCD in relation to costs and the APR
To help Member States to correctly apply the Consumer Credit Directive, the Commission published on 8 May 2012 Guidelines on the application of the Directive 2008/48/EC in relation to costs and the Annual Percentage Rate of charge. The Guidelines provide comprehensive explanations how to delineate the total cost of credit, in particular to be included in the calculation of... [more...]
||Rating Agencies – The global rating agencies face potentially stronger rules because of the implications and potential timings of their informed opinions. What about...
Date: 15/11/2011 IP/11/1355 Commission wants better quality credit ratings MEMO/11/788: FAQ: legislative proposal on credit rating agencies (CRAs) Internal Market Commissioner Michel Barnier said: "Ratings have a direct impact on the markets and the wider economy and thus on the prosperity of European citizens. They are not just simple opinions. And rating agencies... [more...]
||Payment Protection Insurance - the late fruits of Bank Lobbying: 100.000 Complaints in the UK and mass lawsuits elsewhere
Why too much Lobbying in Brussels may have hurt the Banking Industry In 1998 the EU mandated a study from iff on Payment Protection Insurance with regard to consumer credit. The findings were alarming: up to 50% of credit cost were hidden in such factually linked contracts. Most of this money consisted out of hidden interest since it flew back to the banks in the form of... [more...]
||US: Regulation on risk-based pricing notice to inform consumers
Risk-Based Pricing Regulations: What Creditors Need To Know www.collectionscreditrisk.com/news/risk-based-pricing-regulations-what-creditors-need-to-know-3002887-1.html Collections & Credit Risk | Wednesday, August 11, 2010 By Paul Thielemann Financial institutions have had no shortage of regulatory changes to manage in recent months. While the CARD Act and the Dodd-Frank... [more...]
||CREDIT REPORTS – Acknowledging the discriminating vicious cycle of bad credit worthiness bad job market chances if employers have access to this information
Should Your Credit Report Cost You a Job? A new bill would prohibit employers from using credit reports in hiring decisions By Liz Wolgemuth (Posted July 29, 2009) This sounds like a cycle of pure misery: First, you get laid off. Then, you're one of the 4.4 million Americans who in June saw their job searches stretch out six months or more. The bills keep rolling in... [more...]
||BRAZIL – A law on collection of positive debt data is being rushed without due time and discussion. Member of the global coalition for responsible credit, Brasilcon, reminds us that...
The arguments to let positive data enter are more negative ones since allowing only negative data the picture will get wrong. A customer who defaults in a small credit will have this information available while the fact that he serviced a big loan for years without problems may not be considered. This is certainly a big disadvantage. On the other hand removing all barriers... [more...]
||CREDIT DATABASES AND SHARING - Expert Group selected by the Commission with the aim of identifying solutions that maximise the circulation of credit data within the EU.
2 of ECRC’s active partners are represented in the Expert Group on Credit Histories. With only 3 consumer representatives and 2 data protection experts out of 20 experts, will they be able to ensure a high level of consumer protection in this area? Below the press release and the list of experts. We welcome these members to come to the conference in London to discuss the... [more...]
||SCORING – ECRC member GP Forschungsgruppe has produced a study of bank credit scoring in practice, looking at data used, discrimination and data protection laws in Germany.
Commissioned by the Federation of German Consumer Organisations (vzbv), below is an abstract of the German study “Scoring tested in practice” by Dieter Korczak & Michael Wilken from the GP Forschungsgruppe. The report attached below is itself in German and goes under the title “Scoring im Praxistest: Aussagekraft uns Anwendung von Scoringverfahren in der Kreditvergabe und... [more...]
||CZECH REPUBLIC - Indebtedness seen by credit referencing agency operating in the new EU Member State
(Czech Business Weekly - Prague,Czech Republic) Czech Republic provider run credit register says 30% growth in consumer lending only a problem because consumers lack responsibility and financial literacy “It is up to clients to choose what is more suitable for them from the wide and colorful offering. For Solus, fulfilling the code of ethics is rather critical. . The... [more...]
||BRUSSELS 2007! Workshop 4: "Scoring and Social Discrimination in Credit Contracts" - Abstract from Mr Van Tol
W4: SCORING AND SOCIAL DISCRIMINATION IN CREDIT CONTRACTS The issue of discrimination and credit scores has several aspects, each raising different problems: (1) Minorities and immigrants are disproportionately targeted by sellers of risky financial services products with a high failure rate, thus putting downward pressure on their credit scores. (2) Credit... [more...]
||BRUSSELS 2007! Workshop 4: "Scoring and Social Discrimination in Credit Contracts" - STATEMENTS
BRUSSELS 2007! Workshop 4: "Scoring" Statements from Melina Mouzouraki (EKPIZO, Greece, Chair); George Wilkinson (Eurofinas/GWA); Fréderic Rottier (Observatoire des Crédits et de l'Endettement, Belgium); Joop Lobstein (BKR, Netherlands) [more...]
||BRUSSELS 2007! Workshop 4: "Scoring and Social Discrimination in Credit Contracts" - OUTLINE
W4: SCORING AND SOCIAL DISCRIMINATION IN CREDIT CONTRACTS Melina Mouzouraki (EKPIZO, Greece, Chair); Mike Bradford (Experian); George Wilkinson (Eurofinas/GWA); Hubert Van Tol (NCRC, USA); Fréderic Rottier (Observatoire des Crédits et de l'Endettement, Belgium); Joop Lobstein (BKR, Netherlands) Held on Friday Sept14th at 3.30pm, concurrent workshop is W3 on Financial... [more...]
||BRUSSELS 2007! Workshop 4: "Scoring and Social Discrimination in Credit Contracts" - Abstract from Mr Wilkinson
W4: SCORING AND SOCIAL DISCRIMINATION IN CREDIT CONTRACTS George Wilkinson (George Wilkinson associates, Independent Credit Industry Specialist) THE LENDERS’ DILEMMA • LENDERS have: – high operating costs (branch/staff/IT/etc) – unwelcome bad debt losses (significant?) • CREDIT DECISIONS need to be optimal: – declining good payers makes no sense – accepting bad payers... [more...]
||BRUSSELS 2007! Workshop 2: "Credit Card Credit: American Overindebtedness a European Future?" - OUTLINE
W2: CREDIT CARD CREDIT - AMERICAN OVER-INDEBTEDNESS A EUROPEAN FUTURE? Achim Tiffe (iff, Chair); Matthew Lee (Fair Finance Watch, USA); Damon Gibbons (DOOD, UK); Paolo Landi (Adiconsum, Italy); Manfred Westphal (vzbv, Germany) Held on Friday Sept14th at 2pm, concurrent workshop is W1 on Overindebtedness and Bankruptcy. Credit cards allow purchases, cash advances, and... [more...]
||Discrimination: "28 million unbanked people in the U.S., and 45 million underserved who lack adequate access to credit." US Bank Authorities discuss Minority Banking and Discrimination...
"The four Federal financial institution of the USA regulatory agencies are hosting an interagency national conference for Federally-insured minority depository institutions (MDIs) on the challenges and issues facing the MDI segment of the banking industry. The conference will be held at the Miami Beach Resort and Spa in Miami Beach, Florida, from July 31- August 2, 2007. ... [more...]
||Discrimination in Financial Services in the US - In Debt We Trust: America Before the Bubble Bursts Gregory D. Scquires writes on the "The Two Tired Market for Financial Services" in...
BERLIN CONFERENCE OF THE LAW & SOCIETY ASS. The Berlin Conference of scholars debating Overindebtedness in the three worlds is approaching. As the facinating papers that will be presented at this conference are still internal we cannot make them publicly available. Their contents can be guessed through the programme whose latest draft we just published. Gregory Squires... [more...]
||RESPONSIBLE CREDIT – The latest Dutch legislative efforts to improve domestic credit markets could be interesting for some of the other European countries to emulate
ECRC’s founding Dutch member Harro Norder from NVVK (Dutch council of municipal banks) shares with us the latest initiatives he and his bank have led in their efforts to make Dutch credit markets more socially responsible. LIMITED INTEREST RATES Over-indebtedness is strongly related to small loans with high interest rates. Financing cars, home video sets and so one are... [more...]
||Expanding the Use of Credit Reports and Credit Scores: The Need for Caution and Empiricism.
Introduction With the globalization of the consumer financial markets, increasing attention is being paid to the use of credit reports and credit scoring to determine which consumers should have access to credit and the price they should pay for the credit they obtain. Also, automated underwriting and the securitization of consumer receivables have both increased reliance... [more...]
||Newspaper article of the month: Melanie Bergermann from the German Wirtschaftswoche blames especially foreign banks in Germany to destroy responsible credit extension.
Title: “Consumer Credit: Profiting from Despair”. In this article Wirtschaftswoche describes how banks in Germany have started a campaign where the disclosed interest rates have nothing to do with what consumers really have to pay, how banks sell credit which already at the beginning creates overindebted clients and how insurance premiums combined with a credit contract... [more...]
||Brussels 2006 - Report on Workshop 7: "Can Risk-Based Pricing Work in the Absence of Comprehensive Credit Reporting?" chaired by Melina Mouzouraki
INTRODUCTION Until recently the price of consumer credit (i.e. the interest rate) was being determined by objective parameters. There was a one and only interest rate per product. Since the mid-nineties there was a change in the USA, by which the interest rate varied according to the risk associated with the specific credit. This practice is currently being gradually... [more...]
||Two plans submitted by the DTI to curb overindebtedness involve extending data sharing without permission. Will this make lenders more responsible?
The DTI consultation paper is designed to provide a starting point for consultation with the financial services industry and consumer groups about extending by 10% the number of bank accounts covered. As part of the government’s over-indebtedness strategy, the DTI wants lenders, where appropriate, to share relevant data about the amount of credit that is available to an... [more...]
||Department of Trade and Industry: Misrepresentation of Interest Rate Disclosure in Europe - Office of Fair Trading: Study on Misrepresentation of Interest Rate Disclosure in the UK
A Japanese bar association has asked partners in Germany to comment on the annexed graphics showing that interest rate disclosure in Germany would only cover about half of the true cost of the credit. They got these graphs from the UK Department of Trade and Industry (DTI). While the UK is not represented in the graph, France and Germany are once again taken as bad... [more...]
||Workshop 7 "Can Risk-based Pricing Work in the Absence of Comprehensive Credit Reporting?" Workshop outline
A key element in the ability of financial institutions to charge different prices depending on the differing levels of risk is the availability of extensive information on the credit histories of potential borrowers. In the U.S., credit reporting agencies have extensive information, both positive and negative, about most aspects of individual credit histories. Credit... [more...]
||Workshop 7 "Can Risk-based Pricing Work in the Absence of Comprehensive Credit Reporting?" Introduction abstract by Melina Mouzouraki
INTRODUCTORY REMARKS (By Melina Mouzouraki, Attorney of law, Legal Adviser of EKPIZO Consumers’ Association, and chairperson of the workshop) Risk-based pricing stands as the modern tool to restrict the impact of unsafe claims to the level of the interest rate. The risk of non-payment is individualized on the basis of the characteristics (in market terms credit... [more...]
||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... [more...]
||Workshop 7: "Can Risk-based Pricing Work in the Absence of Comprehensive Credit Reporting?" Background paper by Tatjana Jovanic
"BEST PRACTICES OF CONSUMER CREDIT" REPORTING CREDIT REFERENCE AGENCIES – THE CASE OF NEW EU MEMBER STATES AND OTHER SOUTH-EAST EUROPEAN COUNTRIES by Tatjana Jovanic Lecturer University of Belgrade, School of Law ABSTRACT Credit Reference agencies are databases of information on borrowers in a financial system which creditors use as a risk management tool in order to... [more...]
||Workshop 7 "Can Risk-based Pricing Work in the Absence of Comprehensive Credit Reporting?" Contribution paper by Harro Norder
Volkskredietbank - a General Strategic Analysis In this analytical paper Harro Norder explains the history and future strategic direction of the Volkskredietbank in the Netherlands. Through the historical context, the reason for establishing the bank, the type of organisation it is and its strategic analysis, the resulting position of the VKB shows it to be highly... [more...]
||Customer Loyalty Packages Make It Difficult to Compare Financial Services Study in Swedish available Consumer Law - The Finnish Consumer Ombudman's Newsletter 2/2006
Customer loyalty and benefit programmes are used in more and more services. The Consumer Agency has regarded connecting them to credit and basic banking services as a special problem. As a result of different customer packages it is even more difficult for consumers to determine what services include and how much they cost. Possibilities to compare different financial... [more...]
||Immigrants access to Credit in Italy - Integration through credit and oppotunities for the economy? E-stat Gruppo Delta, in scientific partnership with Censis, has analysed the...
IMMIGRANTS AND ECONOMIC CITIZENSHIP CONSUMER STYLES AND ACCESS TO CREDIT IN MULTI-ETHNIC ITALY Abstract It is however undeniable that foreign immigrants living in Italy today show a remarkable economic vigour and that their relationship with the credit system shows appreciable levels of social-economical inclusion. Indeed, the average 51% yearly increase 1of overall... [more...]
||Bureaus Take Another Run At Fair Isaac Will single-algorithm pitch be enough to persuade lenders?
American Banker Wednesday, March 15, 2006 By Matthew Quinn The big three credit bureaus - Equifax Inc., Experian Inc., and TransUnion LLC - said they have banded together to develop a scoring system they hope will give Fair Isaac Corp.'s FICO scores competition as the industry standard. Currently the bureaus provide FICO scores calculated using Fair Isaac's... [more...]
||US Credit agencies adopt common reporting score
By Jonathan Stempel Reuters Tuesday, March 14, 2006; 8:20 PM NEW YORK (Reuters) - The three major U.S. consumer credit reporting agencies on Tuesday announced a new credit scoring system they said will simplify the process by which millions of Americans obtain loans. Equifax Inc. , Experian and TransUnion LLC, a unit of Britain's GUS Plc , in a statement said they... [more...]
||Unites States, Washington Mutual Inc. to Offer Free Checking Account with Rebates
American Banker Monday, March 13, 2006 By Jim Cole Washington Mutual Inc. is expected to unveil a free checking account today that includes rebates on debit card purchases and a waiver of one overdraft charge each year, industry sources said Friday. The product launch will coincide with the launch of a much-anticipated advertising... [more...]
||BEST PRACTICES OF CONSUMER CREDIT REPORTING - CREDIT REFERENCE AGENCIES: THE CASE OF NEW EU MEMBER STATES AND OTHER SOUTH-EAST EUROPEAN COUNTRIES Paper Presented at the IACL - 10th...
ABSTRACT Credit Reference agencies are databases of information on borrowers in a financial system which creditors use as a risk management tool in order to evaluate past performance and predict the financial capacity of the borrower to assume a future credit commitment. They are often seen as a tool to prevent overindebteness. The aim of this paper is to analyze credit... [more...]
||US Federal Reserve Board Chairman Bernanke's views on Small Banks, Nonbanks
American Banker Thursday, March 9, 2006 By Patrick Rucker WASHINGTON - Listing a series of threats facing community banks, Federal Reserve Board Chairman Ben Bernanke said a majority of small businesses now use a nonbank to meet at least some of their financial needs. Citing data the Fed has not yet released, Mr. Bernanke said Wednesday that 54% of small... [more...]
||Branch closures hit poor hardest in the UK - An article from The English Guardian
Branch closures 'hit poor hardest' Susan Smillie and agencies Thursday February 23 2006 The Guardian Bank and building societies have closed one in five branches in the last 10 years, with deprived areas bearing the brunt of the closures, research shows today. The study, from the University of Nottingham, found that 4,041 branches were closed between 1995 and 2003,... [more...]
||Harmonisation of Cost Elements of the Annual Percentage Rate of Charge, APR (1998) Project No.: AO-2600/97/000169 for DG SANCO presented by Prof. Dr. jur. Udo Reifner, iff in...
I. Aims of the study A. The Purpose and Object of the Study B. The Discussion on Cost Elements C. The Tools of Analysis: Mathematical, Legal and Economic Approaches II. The Legal Analysis A. The Philosophy of the Directive B. The Interpretation of the Directive as far as cost elements are concerned C. Implementation into National Legislation: Conclusions III.... [more...]