"Sequels are never any good" seems to be the motto of the credit market and bankruptcy legislation in Europe. Few companies and individuals are able to overcome a situation of insolvency, or regain access to the credit market. This situation has only been aggravated by the financial crisis of 2008. The inability to rebuild makes investment difficult, prevents job creation, and exacerbates systemic risk. The 11.4% of European citizens have excessive indebtedness, with difficulties in paying for basic services.
The EU has taken the initiative, with the proposed Directive on Preventive Restructuring Frameworks, Second Chance and measures to increase the effectiveness of the procedures for remission, insolvency and restructuring, published on 22 November 2016. However, any change directed to facilitate the debtor’s recovery generates its own risk in the form of a generalized increase in financing costs. This argument has served as a balm to calm the reformist momentum... until now.
Is it possible to improve access to credit and recovery of debtors, without excessive price increases? Many experts seem to suggest so, using arguments similar the ones used in the insurance market: to avoid price increases and adverse selection, premiums must be adjusted to the specific risk, for which more information is needed. Credit reporting systems would prevent private over-indebtedness by encouraging responsible lending, as reflected in Directives 2008/48, consumer credit, and 2014/17 EU on credit for residential property, or Consumer Financial Services Action Plan, COM (2017) 139 final.
The improvement of credit reporting systems would require controversial reforms, such as entities’ access to the financial information of individuals, including past payment behavior in the entity where the credit is requested, and in others. We are talking about the creation of positive solvency files.
Although the advantages of these files are clear, their creation would pose complex problems of personal data protection, a matter regulated by the General Regulation on Data Protection 2016/679, and which usually causes a great deal of restlessness. The alternative would be to allow market forces such as the Fintech to operate in the hope that they would generate open-ended models of credit information. This would not be less complex, as it would raise the same questions about customer protection and financial stability that continue to assault post-2008 Financial Market Law.
The complexity of the problem commands caution, but its urgency requires open and honest assessment, one that addresses the real problems and seeks solutions. This is the goal of this conference, which aims to create a first opportunity for debate and reflection, and gina clarity in the creation of a second opportunity for companies and citizens.
DirectorsMatilde Cuena Casas. A professor of Civil Law. An accredited to Professor at the Universidad Complutense of Madrid. Vice-President of the Foundation "Hay Derecho".
Ignacio Tirado Martí. Professor of Commercial Law at Universidad Autónoma de Madrid.
David Ramos Muñoz. Professor of Commercial Law at Universidad Carlos III de Madrid.
CoordinatorJosé María Torres. President of Numintec.
SecretaryCamila Jaramillo. Lawyer; Ph.D. Candidate at Universidad Complutense de Madrid.