Consumer credit fundamentals / Steven Finlay.

Format:

Book

Author/Creator:

Finlay, Steven, 1969-

Language:

English

Subjects (All):

Consumer credit--Great Britain.

Consumer credit.

Consumer credit--History.

Consumer credit--Management.

Debt--Great Britain.

Debt.

History.

Great Britain.

Physical Description:

xvi, 252 pages : illustrations ; 23 cm

Edition:

Second edition.

Place of Publication:

Basingstoke ; New York, NY : Palgrave Macmillan, 2009.

Contents:

1 Introduction 1

1.1 The rise and rise of consumer credit 2

1.2 Consumer credit defined 3

1.3 Boon or bane? 5

1.4 Working with credit 8

1.5 Chapter summary 9

1.6 Suggested sources of further information 10

2 Products and Providers 11

2.1 The features of credit agreements 11

2.2 The cost of credit 13

2.3 Credit products 14

2.3.1 Mortgages 14

2.3.2 Personal loans (installment loans) 16

2.3.3 Retail credit (retail loans) 17

2.3.4 Hire-purchase 17

2.3.5 Card accounts 18

2.3.6 Charge accounts 21

2.3.7 Revolving loans 21

2.3.8 Mail order catalogue accounts 22

2.3.9 Overdrafts 22

2.3.10 Pawning (pledging) 23

2.3.11 Payday loans and cheque cashing services 24

2.4 Productive and consumptive credit 24

2.5 Prime and sub-prime (mainstream and non-mainstream) lending

2.6 Credit products permitted under Islamic (Shari'ah) law 25

2.7 Credit providers 27

2.8 Chapter summary 30

2.9 Suggested sources of further information 32

3 The History of Credit 33

3.1 Ancient origins 33

3.2 The Greek experience 34

3.3 The Romans 36

3.4 The early Church to late middle ages 37

3.5 The Reformation 39

3.6 A modern philosophy of credit 41

3.7 From Victorian necessity to the First World War 42

3.8 Between the wars 47

3.9 The modern age 47

3.10 The impact of technology 51

3.11 Chapter summary 51

3.12 Suggested sources of further information 52

4 Ethics in Lending 54

4.1 The role of ethics in financial services 54

4.2 Ethics-a theoretical overview 56

4.2.1 Utilitarianism 57

4.2.2 Kant's ethical theory 58

4.2.3 Higher moral authority 59

4.2.4 Natural law, virtue and human rights 59

4.2.5 Ethics in practice 60

4.3 The charging of interest 61

4.4 Interest or usury? 63

4.4.1 Jeremy Bentham's `Defense of Usury' 63

4.4.2 The principle of reasonable return 68

4.5 A right to credit? 70

4.6 The use of personal information in credit granting decisions 71

4.7 Over-indebtedness and responsible lending 73

4.8 Chapter summary 76

4.9 Suggested sources of further information 77

5 Legislation and Consumer Rights 78

5.1 The Consumer Credit Acts 1974 and 2006 (UK) 78

5.1.1 Credit license 79

5.1.2 Requirements for a legally binding credit agreement 79

5.1.3 The right to cancel (right of rescission) 80

5.1.4 Advertising 81

5.1.5 Credit tokens 82

5.1.6 Early settlement 83

5.1.7 Charges for delinquency 84

5.1.8 Court action to recover debt 84

5.1.9 Respossession of goods under hire-purchase and conditional sale agreements 86

5.2 The Enterprise Act 2002 and bankruptcy (UK) 86

5.2.1 The road to bankruptcy 87

5.2.2 After a bankruptcy order has been granted 88

5.2.3 Individual Voluntary Agreements (IVA) 89

5.3 The Data Protection Act 1998 (UK) 89

5.3.1 The right of subject access 91

5.3.2 Data controllers and data processors 92

5.3.3 The right to prevent direct marketing 92

5.3.4 Automated decision making 93

5.4 The Consumer Credit Protection Act 1968 (US) 93

5.4.1 The Truth in Lending Act 1968 93

5.4.2 Garnishment restrictions 94

5.4.3 The Fair Credit Reporting Act 1970 94

5.4.4 The Equal Credit Opportunity Act 1974 95

5.4.5 The Fair Debt Collection Practices Act 1977 95

5.4.6 The Electronic Funds Transfer Act 96

5.5 The Federal Bankruptcy Code 1978 (US) 96

5.5.1 Chapter 7 bankruptcy 97

5.5.2 Chapter 13 bankruptcy 98

5.6 Chapter summary 98

5.7 Recommended sources of further information 99

6 The Economics of Credit and its Marketing 101

6.1 Sources of income 102

6.1.1 Arrangement and account management fees 102

6.1.2 Interest charges 103

6.1.3 Transaction fees 104

6.1.4 Late payment fees, penalty charges and early redemption fees 104

6.1.5 Insurance 106

6.1.6 Merchant and interchange fees 108

6.2 The costs of providing credit 110

6.2.1 Infrastructure and overheads 110

6.2.2 Cost of funds 112

6.2.3 Bad debt and write-off (charge-off) 114

6.2.4 Fraud 114

6.2.5 Provision (and impairment charges) 115

6.3 Advertising and promotion 118

6.3.1 The special case of mail order catalogues 124

6.3.2 Offers and incentives 124

6.3.3 Retention and attrition 126

6.3.4 Cross-selling and up-selling 127

6.4 Capital requirements 128

6.4.1 What is capital? 129

6.4.2 Assets, risk and risk weighted assets 130

6.4.3 The Capital Ratio 131

6.4.4 The standardized approach 131

6.4.5 IRB approaches 132

6.5 Securitization 134

6.6 Chapter summary 135

6.7 Suggested sources of further information 136

7 Credit Granting Decisions 138

7.1 The creditworthy customer 138

7.2 The application for credit 141

7.3 Judgemental decision making 143

7.4 Credit scoring 145

7.4.1 Using the score to make decisions 148

7.4.2 Choosing the outcome period 150

7.5 Comparing judgemental lending and credit scoring 151

7.6 The case against credit scoring 154

7.7 Enhancing credit scoring systems with judgemental decision rules (policy rules) 155

7.7.1 Organizational policy 155

7.7.2 Data sufficiency 156

7.7.3 Expert knowledge 156

7.7.4 Legal requirements 156

7.8 Pricing for risk 157

7.9 Credit scoring models of profitability 159

7.10 Behavioural scoring 162

7.11 The impact of credit scoring 163

7.12 Chapter summary 164

7.13 Suggested sources of further information 165

8 Credit Reference Agencies 166

8.1 The history of credit reference agencies 166

8.2 Information held by credit reference agencies 168

8.3 Public information 169

8.3.1 Court judgements, bankruptcies and repossessions 169

8.3.2 The Electoral (Voters) Roll 169

8.4 Private information 170

8.4.1 Shared customer account data 170

8.4.2 Credit searches 171

8.4.3 Credit Industry Fraud Avoidance Scheme (CIFAS) 172

8.4.4 Gone Away Information Network (GAIN) 172

8.4.5 Notice of correction 173

8.5 Derived information 173

8.5.1 Geo-demographic and socio-economic data 173

8.5.2 Credit scores 174

8.6 Performing a credit search: matching applicant and credit reference data 175

8.6.1 No trace cases 176

8.6.2 Previous addresses, linked addresses and joint applications 177

8.6.3 Third party data 178

8.7 US credit reference agencies 180

8.8 Other national situations 182

8.9 The role of credit reference agencies in credit granting decisions 183

8.10 Using credit reference data to re-evaluate existing customers 183

8.11 Infrastructure requirements for credit reference agency operation 184

8.12 The myth of complexity 185

8.13 Secondary uses of credit reference data 186

8.14 The impact of credit reference agencies 187

8.15 Chapter summary 189

8.16 Suggested sources of further information 189

9 Credit Management 191

9.1 Recruitment 192

9.1.1 The credit granting decision process 194

9.1.2 Setting the terms of business 199

9.1.3 Shadow limits 202

9.1.4 Application fraud 203

9.2 Account management 204

9.2.1 Account cycling and statement production 204

9.2.2 Transaction authorization and transaction fraud 205

9.2.3 Customer or account level management? 207

9.3 Collections 207

9.3.1 Collections strategies 209

9.3.2 Designing collections strategies and action paths 212

9.4 Debt recovery 212

9.4.1 Write-off, debt sale and legal action 214

9.5 The business functions responsible for credit management 214

9.5.1 Marketing 214

9.5.2 Credit 215

9.5.3 Operations 217

9.5.4 IT 218

9.5.5 Legal, and accounting and finance 218

9.6 Chapter summary 219

9.7 Suggested sources of further information 219.

Notes:

Previous ed.: 2005.

Includes bibliographical references (pages 239-245) and index.

ISBN:

9780230220157

0230220150

OCLC:

277068244