An Exploratory Study of Issues Around Irresponsible Lending and Borrowing in the UK Consumer Credit Market

Ndlovu, Tabani (2005) An Exploratory Study of Issues Around Irresponsible Lending and Borrowing in the UK Consumer Credit Market. [Dissertation (University of Nottingham only)] (Unpublished)

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The study on issues around irresponsible lending and borrowing in the UK consumer credit market raises more questions than answers. This owes to the secretive and competitive nature of the lending market, whose main artillery is information. It is therefore not surprising that lenders were not forthcoming in volunteering information about their operations.

Government recently proposed to clamp down on rogue lenders for excessively levying charges on borrowers. The media continues to highlight heightening concerns about alleged irresponsibility in the consumer lending circles, prompting the Government to commission a number of studies and undertakings to investigate and address the issues raised.

This report explores issues around lending and borrowing, opening with an analysis of whether lenders should concern themselves with social responsibility issues. Theoretical guidelines highlight the interconnectedness of market and non market issues (Baron, 2003) and the influence thereof on business. Pressure is mounting for corporates to go beyond profit motives and address wider societal issues (Amaeshi & Adi, 2005; Carroll, 1999; Baron, 2003 and Canon, 1994). The conclusion is that lenders, as corporates, can only ignore wider social obligations at their own peril. The current wave of reporting initiatives by lenders may be a genuine gesture of taking responsibility for their operations or an attempt to wade off reputational risk and avoid regulation by proposing the self-regulation route.

This report concludes that the intense competition for clients has seen new and questionable marketing tactics. Consequently, there are a number of ways in which lenders adopting these new strategies can be found to fit the irresponsible lender label. On the other hand, the results of a survey carried out to study borrower attitudes reveals that borrowers have as much a responsibility as lenders and that addressing the problem from one angle will not stamp out the alleged irresponsible behaviour. Key to the proposed solutions in this report is the access to, and sharing of borrower information by lenders to enable them to make informed decisions. Further, lenders have a responsibility to promote financial literacy among their clients. The study closes with suggestions on areas for possible future research.

Item Type: Dissertation (University of Nottingham only)
Keywords: irresponsible lending, borrowing. Consumer Credit market
Depositing User: EP, Services
Date Deposited: 08 Dec 2005
Last Modified: 10 Apr 2018 06:51

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