The consumer's lot is not easy. The economic crisis has sparked discussions of how consumers should be educated to better understand the nuances and risks associated with financial products. What seems to be implied is that consumers should know better than to buy high-risk financial products. It never ceases to surprise us how corporate social responsibility and responsible lending can be primarily seen as a need to improve consumer education, monitoring and registration rather than a requirement for companies to engage in some introspection.
Questions of what types of products should be made available to non-professional investors, how financial products are advertised to consumers and how the clarity of contract terms could be improved tend to receive much less attention. In this regard, credit must be given to the Norwegian Banking Complaints Board, which in a recent statement found that the nature of certain products was not clearly understandable to consumers and they should therefore not be offered to them.
The discussion surrounding SMS loans is a poignant example of how complicated these questions of responsibility can be. Firstly, there is the operating environment where a credit institution can be easily established without the need for registration or a licence. The precondition for commercial success of the product is also evident - and always has been: how to get money quickly when you need to buy something and there isn't enough money on the bank account. New technology comes to the rescue and suddenly, without as much as a hello, the funds are in your account in a matter of minutes. It doesn't matter whether it's night or day.
Anyone with a bit of common sense and life experience understands that the customer base for such products also includes helpless consumers. After a few years, when the consequences of such borrowing become evident to the greater public and not just the consumer authorities, good ideas are suddenly needed. And wouldn't you know it, certain actors in the business sector will suggest registration of all consumer debt and credit histories as the primary solution to the problem. Those who have witnessed the distress of SMS borrowers first hand have also clutched the idea of credit registration as a first line of defence. I can understand that, a responsible lending appears too often to be far beyond reach. Could it be possible that not all products for which there is demand should be offered? Could it be possible that an entrepreneur who has taken a calculated risk would be liable for the consequences of his actions and the consequences would not have to be borne by us all?
Then again, these times are said to call for more collective thinking. In the name of collectivity, we should not adjust our existing consumption patterns, because only through continued spending, together we can work our way out of this predicament as quickly as possible. The advertising messages clearly support buying and consumption, but that aspect of collectivity tends to get overlooked. At Christmas time, the message was ”buy for yourself what you would want others to buy for you”. You should go out today and buy yourself some of that new chocolate - who else would you buy it for? But if you have to put yourself and your own welfare first, is it really such a good idea to keep on spending as you wait to find out whether you are next to get laid off? On the other hand, if I keep on buying and spending, will I be able to prevent others from getting laid off as well? The life of a consumer is far from easy: we need education!
The 10th of February