Conference calls for new approach to improve credit regulation

On 13 November, over 150 consumer delegates from 24 countries will gather in London to call for new rules for the regulation of credit markets and for governments to improve their response to the global financial crisis.

The conference, which will be held just days before world leaders are due to meet at a global crisis summit, called by US President George Bush, will argue that consumers need to be actively involved in establishing a new regulatory framework for financial services at global, European and national levels. The conference will issue a declaration (‘the London Declaration’) setting out the next steps that governments across the world now need to take.

Describing the failure of free market approaches as ‘self-evident’ in the light of events in the past few months, the declaration goes on to call for a combination of immediate measures to support households in difficulties with mortgage and credit payments, and longer term steps to create a responsible credit system.

Measures to support households with mortgage problems that will be debated include calling for governments and banks to create a ‘mortgage rescue fund’ for households which can be used to help borrowers re-schedule mortgages at affordable rates of interest over the next five to ten years, and providing courts with the power to stop repossessions while this fund is used.

Proposed regulatory changes include placing banks under an obligation to provide access to ‘responsible credit’ for low income households and to report publicly on their performance against this aim.

The discussion over the ‘London Declaration’ has been organised by the European Coalition for Responsible Credit (ECRC), and the UK’s Debt on our Doorstep (Dood) Campaign. The conference is being supported by Citi and GE, and speakers include representatives from the Council of Europe and European Commission.

Professor Udo Reifner, ECRC Chair, commented “This is a critical conference. Our governments are trying to respond to the crisis without seeking the views of consumers whilst they sit down with bankers. That’s why the bailouts have so far focused on banks and not households. We are calling for a new approach to be adopted in the way that banks are regulated, with much greater consumer involvement at all levels. It is totally unacceptable for investors and bankers to be protected whilst the causes of the crisis – unregulated and extortionate credit – remain in place.”

Damon Gibbons, Dood Chair, said “Providing people with access to credit is essential, for them as individuals and for our economies as a whole. Over the last twenty years it has become critical to enable households to manage risk and make investments in their homes and futures. But because of the growing importance of credit, we need to apply much greater scrutiny to the terms and conditions on which it is provided and ensure people have fair access to it. We need an obligation on banks to provide access and we need better regulation. The two must now go hand in hand”.

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Notes to Editors