Protecting the most vulnerable in consumer credit transactions

There are two key ways in which the Australian Uniform Consumer Credit Code seeks to protect consumers in relation to consumer credit transactions. The first is by means of disclosure regulation where information is required to be disclosed to the consumer before the credit contract is entered into and the second is by way of “safety net” provisions, where contracts can be varied or set aside in the event of hardship, a finding that the transaction was unjust, or a finding of unconscionable fees or charges. This article explores the limitations of both of these means of protection, particularly in the case of vulnerable, low-income consumers. In order to highlight the inadequacies of these forms of consumer protection and the need for regulatory reform, we draw on interviews conducted with 30 low-income consumers who had recently signed a credit contract, focusing on their understanding of information disclosed in the contract, as well as their responses to hypothetical unfair terms and their understanding of their rights, for example in the event of an unjust transaction. These interviews were conducted as part of a joint research project between Brotherhood of St Laurence and Griffith University’s Centre for Credit and Consumer Law, funded by Consumer Affairs Victoria.

National consumer credit laws, financial exclusion and interest rate caps : The case for diversity within a centralised framework

Australia is going through a major reform of consumer credit regulation, with the implementation of a proposal to transfer regulatory responsibility from the State and Territory Governments to the Commonwealth Government. While the broad policy approach is supported, the reform process has missed a significant opportunity to engage directly with issues of financial exclusion and with the potential role of regulation to reduce financial exclusion. The imposition of an interest rate cap can limit the impact of financial exclusion. However, the future of the existing interest rate caps is uncertain, given the diversity of approaches, and the heated debate that surrounds this issue. In the absence of support for regulatory initiatives to increase the availability of low cost, small loans, permitting regulatory diversity on this issue of interest rate caps, within an otherwise centralised regulatory framework., can minimise the impact of financial exclusion on consumers.

Housing supply in Australia : the impact of the availability of development finance

Before the Global Financial Crisis many providers of finance had growth mandates and actively pursued development finance deals as a way of gaining higher returns on funds with regular capital turnover and re-investment possible. This was able to be achieved through high gearing and low presales in a strong market. As asset prices fell, loan covenants breached and memories of the 1990’s returned, banks rapidly adjusted their risk appetite via retraction of gearing and expansion of presale requirements. Early signs of loosening in bank credit policy are emerging, however parties seeking development finance are faced with a severely reduced number of institutions from which to source funding. The few institutions that are lending are filtering out only the best credit risks by way of constrictive credit conditions including: low loan to value ratios, the corresponding requirement to contribute high levels of equity, lack of support in non-prime locations and the requirement for only borrowers with well established track records. In this risk averse and capital constrained environment, the ability of developers to proceed with real estate developments is still being constrained by their inability to obtain project finance. This paper will examine the pre and post GFC development finance environment. It will identify the key lending criteria relevant to real estate development finance and will detail the related changes to credit policies over this period. The associated impact to real estate development projects will be presented, highlighting the significant constraint to supply that the inability to obtain finance poses.

Micro-credit is necessary but not sufficient for entrepreneurs in desperate poverty

Micro-credit has often been used as a poverty alleviation strategy. However, there is little evidence to suggest that micro-credit alone can promote economic activities because micro-credit does not teach anything by itself (Brett 2006; Mayoux 1999; Sievers & Vandenberg 2007). Mistakenly, the focus of micro-credit has been the alleviation of immediate poverty, rather than the development of economic activity that would provide a long term solution. Paraphrasing the age old saying, "Give a man a fish and you feed him for a day, teach him to fish and you will feed him for a life time" micro-credit enables the fisherman to buy a net, but in many cases does nothing to ensure that he knows how to use it to benefit his family and the community. If the borrower doesn't know how to use the net, he will return to his old way of doing things-but with the added burden of having to pay back the debt. Given the state of extreme poverty experienced by the vast majority of the population in developing countries, borrowed money is often used for purposes other than creating the foundations for a sustainable economic growth. Typical examples of how micro-credit is generally used include covering funeral costs, buying food, medicines, and other similarly important necessities. The main problem that derives from using loans in this way is that apart from not improving living conditions in a sustainable manner, borrowers are also exposed to the risk of over-indebtedness, with its subsequent human and social implications.

Credit rating agencies' roles have to be reassessed

With the disintermediation of the financial markets, credit rating agencies filled the informational need of investors on the creditworthiness of borrowers. They acquired their privileged position in the financial market through their intellectual technology and reputational capital. To a large extent, they have gradually dissipated the authority of state regulators and supervisory authorities with their increasing reliance on credit ratings for regulatory purposes. But the recent credit crisis revives the question on whether states should retake their authorities and how far rating agencies should be subjected to competition, transparency and accountability constraints imposed by the public and the market on state regulators and supervisory authorities. Against this backdrop, this article critically explores the key concerns with credit rating agencies' functions to regulate financial market for further assessment

A multi-centre open-label randomised non-inferiority trial comparing watchful waiting to antibiotic treatment for acute otitis media without perforation in low-risk urban Aboriginal and Torres Strait Islander children (the WATCH trial): study protocol for a randomised controlled trial

Background Treatment guidelines recommend watchful waiting for children older than 2 years with acute otitis media (AOM) without perforation, unless they are at high risk of complications. The high prevalence of chronic suppurative otitis media (CSOM) in remote Aboriginal and Torres Strait Islander communities leads these children to be classified as high risk. Urban Aboriginal and Torres Strait Islander children are at lower risk of complications, but evidence to support the subsequent recommendation for watchful waiting in this population is lacking. Methods/Design This non-inferiority multi-centre randomised controlled trial will determine whether watchful waiting is non-inferior to immediate antibiotics for urban Aboriginal and Torres Strait Islander children with AOM without perforation. Children aged 2 − 16 years with AOM who are considered at low risk for complications will be recruited from six participating urban primary health care services across Australia. We will obtain informed consent from each participant or their guardian. The primary outcome is clinical resolution on day 7 (no pain, no fever of at least 38 °C, no bulging eardrum and no complications of AOM such as perforation or mastoiditis) as assessed by general practitioners or nurse practitioners. Participants and outcome assessors will not be blinded to treatment. With a sample size of 198 children in each arm, we have 80 % power to detect a non-inferiority margin of up to 10 % at a significance level of 5 %, assuming clinical improvement of at least 80 % in both groups. Allowing for a 20 % dropout rate, we aim to recruit 495 children. We will analyse both by intention-to-treat and per protocol. We will assess the cost- effectiveness of watchful waiting compared to immediate antibiotic prescription. We will also report on the implementation of the trial from the perspectives of parents/carers, health professionals and researchers. Discussion The trial will provide evidence for the safety and effectiveness of watchful waiting for the management of AOM in Aboriginal and Torres Strait Islander children living in urban settings who are considered to be at low risk of complications.

A new low temperature synthesis route of fraipontite (Zn,Al)3(Si,Al)2O5(OH)4

A low temperature synthesis method based on the decomposition of urea at 90°C in water has been developed to synthesise fraipontite. This material is characterised by a basal reflection 001 at 7.44 Å. The trioctahedral nature of the fraipontite is shown by the presence of a 06l band around 1.54 Å, while a minor band around 1.51 Å indicates some cation ordering between Zn and Al resulting in Al-rich areas with a more dioctahedral nature. TEM and IR indicate that no separate kaolinite phase is present. An increase in the Al content however, did result in the formation of some SiO2 in the form of quartz. Minor impurities of carbonate salts were observed during the synthesis caused by to the formation of CO32- during the decomposition of urea.