Financial Regulation : Reforming The Consumer Credit Regime

Maxed out is a documentary written and directed by James Scurlock investigating debt in America and shows how the credit and lending issues are affecting society. This documentary shows how banks, credit card companies and other creditors intentionally market to people who are more likely to have problems paying their debts such as full time college students, previous bankruptcy filers and people with visual behavior weaknesses. However, the poor and uneducated are not the only ones effected by debt traps. In today’s society almost everything it purchased on credit from every day households to the government. The average household debt has been steadily rising for decades, millions of people in America have simply accustomed themselves to

With concerns of job security many can suddenly find themselves out of work and financially in debt.

Markets were being mercenary and taking risky actions which led to error. Markets put responsibility on bankers and Wall Street executives to prevent such errors. However, there was more to what caused the financial crisis. Rapacity was crucial in the financial crisis. Because markets made their way to places they shouldn’t have been, consumers now need to find a way to cut off

In the early 1980’s the conservative government headed by Margaret Thatcher, began to liberalise the financial industry. This promoted more competition between firms to attract customers, and offer credit facilities to a wider range of consumers. Companies used aggressive marketing to attract customers, but the amount of different products available on the market to customers made it confusing, and many took on loans and credit cards without fully understanding the product they were buying, or the interest rates they would have to pay. This resulted in a wider range of consumers having access to buying goods on

While so many people are struggling, even those on the higher end of the middle class have relatively little after paying the bills: on average, some $1,300 a month. One leaky roof and they’re in trouble.’

According to CareerBuilder.com, a whopping 61% of American households lived paycheck to paycheck in 2009. That number is huge, especially since only 49% lived that way in 2008, and only 41% in 2007. Whether it is due to losing one or both household incomes or simply a reduction in the household incomes, the statistic is staggering. With families not able to adequately save for any unexpected expense that may arise, they are finding that more often than not there is more month than money. So what happens when the rent/mortgage payment is due, groceries need to be purchased, and then the car breaks down? For some, a small personal loan at a local bank is all it takes to get back on track. For many though, this isn’t an option, and they

It seems that there is never a time in the world where we can be assured that prosperity for a large percentage of the population is a safe bet for the foreseeable future. There always seems to be another financial crisis lurking around the corner, even when things seem the most settled. That reality can be a scary one for people to confront, since they have their own financial stakes to consider. If you are the head of a household or a family, this prospect can be even more daunting, since you also have to worry about the fortunes of those who count on you as well as your own. The stress from wondering what’s coming next from the economy at large can be unbearable at times.

Mis-selling gave people the wrong impression that they were insured if they lost their jobs or their source of income. People lose trust in banking products as they expect to be assured in difficult times but when they find out they are not insured and will still have to repay loans they get mentally stressed and they feel like they can’t rely on banking products provided by RBS.

Other services can provide information and assistance such CAB ( Citizens advise bureau) Charlotte can visit Citizens advise bureau they are a non-statutory agency, but they can help her with her debt problem as she has run up a lot of debt due to her drug use. Citizens Advise Bureau stated that unlike most forms of borrowing, credit cards don’t have a repayment schedule, so people can hold unaffordable debts for long periods of time. Credit card lenders have little incentive to help people stay on top of their debts. When people struggle to manage credit card debt-when they get into arrears or can only meet minimum payments. It also states that 18% of people in finically difficulty have their credit limit increased without asking. And five million people with will take over ten years to pay off their debts.

Financial: A vulnerable person who cannot handle their finances on his/her own and requires another person to do so for him/her; family member, friend, or professional; is at major risk of fraud. Multiple times, vulnerable individuals have been defrauded and even harmed physically all killed by the people they entrusted their safety to.

“Since 2007 to mid 2009, global financial markets and systems have been in the grip of the worst financial crisis since the depression era of the late 1920s. Major Banks in the U.S., the U.K. and Europe have collapsed and been bailed out by state aid”. (Valdez and Molyneux, 2010) Identify the main macroeconomic and microeconomic causes that resulted in the above-mentioned crisis and make an assessment of the success or otherwise of the actions taken by the U.K government to resolve the problem.

Whilst a critical part of consumer spending, credit card companies are constantly accused of malicious legal contracts and schemes to increase profits. Without heavy regulation, these companies have the power to bankrupt millions of Americans that rely on credit cards in their daily lives. However, after the introduction of The Credit Card Act of 2009, these accusations represent an inability to accept responsibility for financial blunders on the consumer’s behalf. Due largely in part to the government’s strict regulations, credit card companies should not be at fault for the student credit card debt crisis. Credit card companies remain blameless for student credit card debt as a result of

Consumer credit laws are a number of laws passed by the government to protect consumers from unfair credit practices. Consumer credit laws support consumers by placing a standard for how consumers are to be treated in their daily credit dealings. They support consumers by protecting them against credit discrimination on the basis of race, color, religion, national origin, sex, marital status, or age. It also protects the consumer against billing errors, abusive collection practices, and misuse of their credit information. The Equal Credit Opportunity Act is one of the consumer credit law. This law was designed to protect consumer from discrimination when evaluating creditworthiness. This act specifies that creditors may not “discourage you

All the consumers affected were also made vulnerable to subsequent identity theft given malicious attackers stole their personal data. Equifax was directly affected since its stock began to plunge immediately the news was made public. Additionally, the corporate governance of the company was tarnished given three Equifax executives sold shares worth around $2 million days after the breach discovery, and the “retiring” of the chief security information officers is questionable (Surane & Melin, 2017). Also, the company was exposed to litigations with some lobbyists and interest groups pushing regulators to hold Equifax accountable for the negligence and poor treatment of affected consumers. The proposed new data security laws will present a greater burden to other corporations. Two such laws are the Promoting Responsible Oversight of Transactions and Examinations of Credit Technology (PROTECT), and Freedom From Equifax Exploitation (FREE) will attract more government scrutiny and limit the type of personal data that companies can collect from customers (Alperan, Carter, & Sofio, 2017).

companies, and others now entered an environment where they could compete freely on the domestic credit market. The deregulation quickly made its impact, as lending increasing by a massive 136 percent (73 percent in real terms), and institutions previously hit directly by the regulations were now free to expand, and they did. Between 1986 and 1990, banks expanded by 174 percent and mortgage institutions by 167 percent. However, finance and insurance companies went from thriving under the regulations to losing market shares rapidly, and the finance companies that originally were involved in – and benefitted – from activities such as leasing, factoring, and credit cards into direct lending under the regulation, now lost the superior amount of freedom that they had over banks. With banks entering the market, the finance companies was pushed into higher-risk markets, and since they no longer were able to receive deposits nor to issue bonds, they now had to be financed by direct borrowing in banks or by issuing what Englund refers to as marknadsbevis. Marknadsbevis can be likened to non-callable bonds and were normally guaranteed by banks, which indirectly exposed the banks to extra credit risk (Eklund, “The Swedish Banking Crisis”). Although, it should be noted that Sweden – who between 1985 and 1990 had a current account deficit-to-GDP ratio of 1.1 percent – experienced less overheating than Finland – who had a corresponding figure of 2.9 percent – during the latter part of the