Responsible credit coalition calls for government action on credit crisis

30 June 2008

FLAC (Free Legal Advice Centres) today backed calls by the European Coalition for Responsible Credit (ECRC) in its 'Declaration on the Credit Crisis' for the EU and national governments to restore confidence and stability in the financial markets. Such a move will also offer some protection to consumers from the consequences of irresponsible lending.

The declaration, from a coalition of organisations in several countries including the UK and the USA, has identified irresponsible lending as a major cause of the recent escalation in house prices that has created artificial temporary demand. It also states that deregulation of the credit and investment markets has engendered a lack of transparency that has exposed the worldwide community to unacceptable and uncontrollable levels of risk of financial instability.

Commenting specifically on the Irish situation, FLAC, the only Irish member of the Coalition, said that the deteriorating economic climate will put even greater pressure on already hard pressed low to middle income families. "The recent cocktail of 100% mortgages, high cost personal loans and car finance agreements, maxed-out credit cards and less than rigorous credit checking provides a worrying backdrop to rising unemployment and increases in the price of food and services" according to Paul Joyce, FLAC's senior policy researcher.

"Having stood back while some consumers borrowed beyond their means, will the State now leave it to the courts to try to sort out the potential mess?" Joyce asked. "The legal system for dealing with debt and debt enforcement cases has remained substantially unchanged in over 50 years while the credit market has boomed and it is poorly adapted to deal with consumer debt cases."

FLAC says that certain underlying structural problems need to be addressed to assess the extent of the debt problem in Ireland. According to Joyce, "There is a general lack of statistical information. We should have data on issues such as the number of legal proceedings in relation to consumer debt in train, how many mortgages are in arrears, how serious those arrears are and how many cars have been repossessed in recent months. People in debt should be encouraged to access appropriate legal advice and money advice services at the earliest opportunity rather than waiting for a crisis to develop." In addition, the State should look at the possibility of setting up a Debt Rescheduling Service that would take debt enforcement cases out of the courts, FLAC contends.

Endorsing the principle of responsible credit, FLAC said that access to credit is essential for full participation in society but should be transparent and fair with vigilant regulation required to protect the interests of consumers.

For further information contact:
Paul Joyce, Senior Policy Researcher
T: 01-454 4205/01-874 5690 E:

Noeline Blackwell, Director General
T:01-874 5690 / E:

FLAC, 13 Lower Dorset Street, Dublin 1
T: 01-874 5690 / 1890 350 250 W:


Editors' notes:

  1. FLAC (Free Legal Advice Centres) is an independent human rights organisation dedicated to the realisation of equal access to justice for all. It campaigns through advocacy, strategic litigation and authoritative analysis to contribute to the eradication of social and economic exclusion.
  2. FLAC has a particular focus on consumer debt & credit law and has published a number of reports calling for reform in this area, including the overhaul of laws governing imprisonment around debt and more stringent codes of conduct for lenders.
  3. See the ECRC website at for the text of the declaration and more details on the Coalition, its aims and a full list of members
  4. The Principles of Responsible Credit are available online at