The 12th International Consumer Law Conference Blog

Organised by NALSAR and the International Association for Consumer Law

25th February- Financial Services and Consumer Rights

Time of Session- 4:00- 5:30 p.m.

Chair- Prof. Michelle Kelly-Louw, Associate Professor, University of South Africa

Participants-

1. Rishi Srivastava and Sandeep S.- Plastic Money- How Safe Are You?

2. Vaishnavi Bhaskaran- Irresponsible Lending and Its Impact on Consumer Rights

3. Pratyush Jhunjhunwala- Financial Services and the Government

The session was solely based on Financial Services and its impact on Consumers as well as Consumer Rights. It began with the novel concept of Plastic Money, starting with the explanation of the card scheme, and the placement of the consumer in the entire chain. A brief introduction of the types of Plastic money such as debit cum ATM cards, credit cards, etc. was given, with a special emphasis on Debit cards as they are widely used in India. The threats to Consumers were outlined next,which was explained by dividing the threats into two broad categories, Fraudsters, by way of  skimming, phishing, identity thefts and also by way of stolen cards; and threats from the Banking Companies themselves, by way of caps on interest rates,  provision of Grace Periods, with certain hidden conditions of repayment, the Universal Default Clause, , billing related problems and harassment by recovery agents. The United States and UK, have been more proactive in this field, with their laws dating back to the 1960s. Several recommendations were also provided by the Speakers, a few being rights against unethical debt recollection, sealing of maximum liability in event of misuse of these cards, imposition of ethical obligations on banks and financial institutions to protect the consumers’s rights and  mechanisms to prevent counterfeit currencies in ATMs.

The next topic was about the concept of reckless lending, with a special emphasis on the recent subprime crisis in the United States. The cycle of reckless money-lending due to the creditors succumbing to the greed of higher interest rates, the IMF bailing them out by using the taxpayers’ money, and the consequences  such as instability of a country’s economy was explained. The concept of reckless money-lending, it’s consequences, ethical obligations and consequences were explained too. Other instances of abusive lending practices was also a part of this presentation such as sub-prime loans to prime borrowers and target customers. The other factors which could affect customers such as recovery agents for loans, foreclosures as a result of default and all these factors resulting in the downturn of the economies of several countries was explained. Finally, a brief outline of the legal framework for addressing these issues and other reforms was given by the speaker. 

The third speaker explained the importance of Financial Services and the Government, especially the protection of consumer rights in the Indian enactment, the  Consumer Protection Act, 1986. The Government is a provider of several financial services such as State Finance Corporations, creditor for self-employment schemes, Saving schemes,etc. The importance of maintaining transparency and provision of areas in which the consumer should be protected under the Consumer Protection Act was explained, so also the responsibility of the Reserve Bank of India to promote the banking sector to ensure the confidence of the public in the banking sector. The speaker ended by highlighting role of the government in this area, which included the upliftment of the Indian economy in the 1990s, and hence, it was imperative for the government to continue its work towards the maintenance of a healthy and transperant economy, by improving its own services first.

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Filed under: Sessions

2 Responses

  1. To help consumers, financial providers can help them by giving them the right financial information so as to avoid unfair outcomes. Smith Circuit

  2. […] the strange post here:  25th February- Financial Services and Consumer Rights Share and Enjoy: These icons link to social bookmarking sites where readers can share and […]

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