engleski

(Ir)Responsible Lending and Personal Indebtedness: Consumer Credit Marketing

The problem of personal over-indebtedness is escalating in the last decade in spite of the various regulatory changes being imposed both on the level of European Union and within national regulations. Most of the research and policy have been directed towards mitigation of irresponsible borrowing. Considering the disappointing results of such policies (ever growing number of over- indebted households), this research points to the neglected problem of irresponsible lending practices of the financial industry actors. This direction of research is additionally supported by previous research findings: consumers perceive banking sector as responsible for debt problem, and believe that they act unethically when promoting the easy access to credit. Responsible lending practices span across broad range of lenders´ activities: from information disclosure in pre-contractual stage, creditworthiness assessment to impartial counseling in case of difficulties in repaying debt, just to name a few. This research is focused on the problem of adequate information provision to consumers through marketing activities of principal credit providers. Prior to the field research, desk research of the existing regulation on information disclosure in the advertisement stage of the consumer credit is carried out. The next method applied is content analysis of advertising tools in Croatian financial sector and comparison of the results within European Union. Analysis entails two aspects of advertising content compliance with national legislation and European consumer credit directive (CCD): first, quantity of information disclosed and second, quality of information disclosed. Due to the small credit market and scarce number of specialist lenders the analysis is contained to the banking sector which covers vast majority of consumer credit agreements. Results show that compliance of bank marketing efforts, both quantitative and qualitative, with the information requirements at the advertisement stage is extremely low. That gives evidence to the claim that banks engage in irresponsible lending practices and therefore show very low level of corporate social responsibility. Results also indicate that adequate supervision of the analyzed bank lending practices by responsible regulatory bodies is completely missing.

Bank Marketing, Personal Over-indebtedness, Responsible Lending

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