Thursday, 7 November 2013

How has consumer credit lending changed since the 2008 financial crash?

The financial catastrophe in 2008 served as a rather rude awakening that there were some serious problems with the global financial system, blogs CI's Global Programme Manager for Financial Services Nicola O'Reilly.

Irresponsible lending was one of the key factors in the perfect storm that led to the financial collapse (remember the Fannie Mae and Freddie Mac high risk loans that went bad in the USA?).

So, logically and responsibly, in order to protect the financial system, and of course consumers, we (government, consumers, financial service providers and regulators) all changed what we were doing, strengthening our systems, policies and practices. We behaved more responsibly to make certain we don’t head down that road again.

This is what happened, right? So, no need to panic then...

Well, just to check, CI has asked its Members what is going on at the sharp end in consumer credit and debt.  It would seem that all is not quite as responsible a picture as might be expected – logically speaking.

Delve into our report for a revealing snapshot of what is really happening with credit and debt and current lending practices and policies around the world.

In this report, our Members paint a challenging and, in one or two instances, a more hopeful picture from the consumer perspective on what needs to change to ensure a consumer friendly, responsible and stable credit market. It seems we are not there yet.

The report illustrates common themes and raises a number of red flags with questionable practices by providers such as lack of transparency, ineffective regulation, enforcement failure and significant conflicts in public policy which leave both consumers and the sustainability of the market vulnerable.

The report includes practical recommendations for governments, regulators, providers and other players in the credit market on how to move to a more responsible, and therefore, a more stable and sustainable market by increasing consumer protection and minimising nasty surprises for everyone.

From over indebtedness and debt relief, to student loans, mortgages and payday lending, the report includes case studies on a wide range of credit issues.

The country case studies are Argentina, Australia, Belgium, Fiji, Greece, India, Italy, Malaysia, Russia, Slovenia, South Africa, Uganda, United Kingdom, and the US.

Who is fairing best? Where have we uncovered those flags? Have a look inside, you decide...

The report, Responsible Lending: An international landscape , can be viewed on the CI website.

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