Consumer Protection in French and British Credit Markets

Gunnar Trumbull

UCC08-17: In this paper, I review the trajectory of consumer credit reforms in France and the United Kingdom. Through a period of significant regulatory reform intended to help protect consumers, policymakers have had to conceive what policies would protect the consumer, and how. What is the consumer interest in the realm of consumer lending? In both France and the UK, consumer lending is closely tied to issues of social and economic exclusion. Yet each sees the connection differently. For British policymakers, consumer credit is a tool for fighting exclusion. Exclusion for them is quite directly exclusion from modern credit markets, and, by extension, from the goods and services that access to credit makes possible. For France, consumer credit is perceived as a useful tool of household finance, but one that risks to aggravate rather than to reduce social and economic exclusion. High interest rates charged to highly risky consumers are perceived as a transfer out of the lower classes. Consumer protection is understood at least in part as protection from credit itself…