This article shows that predatory practices are not exclusive to the US but are seen elsewhere as well.
While it is necessary for borrowers to take responsibility for their actions, caveat emptor, it is also true that some lenders and/or financial advisers have acted fast and loose with those who may not have been fully aware of what they were letting themselves in for, of the downside implications of there signing on the dotted line.
As things are right now, it is the borrowers who will be left holding the bag, and the lenders or financial advisers, who have already walked away with their commissions, are all gone.
In order to ensure that wrongdoing is punished on the part of the lenders or financial advisers as well, I propose the set up of an arbitration system, where an independent arbitrator can mediate between the borrower and the lenders or financial advisers, putting them in the same room and deciding where the blame lies. Borrowers in difficulty would have the right to request this arbitration.
If the arbitrator finds that the lenders or financial advisers can share in the fault, they should be required to pay back the commission earned on that deal and, if grievous, they should refer them to their professional body or worse.
In this case, the borrower does not get off, however. They would be given an extension, a reduction in interest charges and a lightening of other terms that the arbitrator decides would be necessary for the borrower to fullfil the obligations under the loan.
Costs of this process, including of covering arbitrator expenses could be shared between the financial institutions and the government.
In the US, there is a person who could be drafted in to lead this effort given his experience and demonstrated capability in cleaning up a previous financial services mess, the Savings and Loan mess. That person is L. William Seidman.
Other countries can surely find their own experts to lead this effort which would assist borrowers in difficulty and hold unscrupulous lenders or financial advisers to account.
Sorry Mr. Seidman for dumping another one on your lap!
Onésimo Alvarez-Moro
See article:
Australian lenders engaging in "predatory" lending by preying on the vulnerable are likely to face tougher scrutiny in a bid to avoid a US-style meltdown.
A parliamentary committee report on home loan lending practices said the recent turmoil in America — caused by greater lending to people with poor credit histories — highlighted the need to stamp out predatory lending, which was widespread during the rapid growth of the US subprime market.
See full Article.
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