Introduction

The seventh part of this book deals with consumer credit and is divided into two chapters. The first chapter outlines how the relaxation of the consumer credit legislative frameworks resulted in an increase in the availability of ‘convenient credit’, which is defined as ‘credit that is granted by the creditor with little or no reference to the creditworthiness of the debtor’. This chapter identifies several problems that have arisen from access to ‘convenient credit’, including record levels of consumer debt, financial exclusion and over-indebtedness; an increase in irresponsible lending practices and ineffective legislative protection of consumers. These have contributed towards a dramatic U-turn by the government towards promoting access to ‘affordable credit’. Affordable credit contains five basic elements: access to loans that are simple and transparent; lenders that are sympathetic towards low income consumers’ circumstances; simple loan application procedures; small loans over a short period of time; and affordable repayments. Chapter 1 then identifies several government initiatives aimed at promoting access to affordable credit, including the creation of the Social Exclusion Unit, the promotion of credit unions, the development of the Saving Gateway and the Financial Inclusion Fund.