Trust and Power in Consumer Credit Relationships - Rethinking Creditworthiness in the Data‑Driven Age

This book examines the nature of the relationship between lenders and borrowers from the perspective of trust and confirms the importance of trust in economics as it reduces transaction costs. Consumer credit use has grown considerably in the past twenty years, fuelled in part by technological developments to assess default risk and automate lending decisions. However, the need to collect and assess information regarding borrower ‘creditworthiness’ is costly, and the process of risk assessment, combined with risk-based pricing, can result in exclusion from the market for those who experience payment difficulties. This book details how levels of trust vary based on different transaction types and draws out the reasons why. Situating consumer credit within a typology of different levels of trust, it argues that this is heading in a direction of increased surveillance. The cost of operating an expansive surveillance system are high and can have negative (possibly unintended) consequences for consumer behaviour (e.g., reluctance to contact creditors when experiencing financial difficulty) which create externalities for other agencies. Summarising the findings from experiments designed to create more trusting relationships, this book argues that a fresh approach is needed and points to practical ways in which a more trusting consumer credit market could be developed. 
In doing so, this book calls for a rethinking of the credit risk assessment process. While it provides fresh ideas to increase levels of trust within the existing direction of travel of increasing data use, it also questions whether alternative approaches might provide for a better exchange of information between lenders and borrowers capable of improving risk assessment at a lower overall cost—and what that would look like. It is of interest to consumer credit lenders, credit reference agencies, financial regulators, academics and consumer bodies concerned with credit and debt issues.
Damon Gibbons is the founder and the chief executive of the Centre for Responsible Credit, a UK charity on a mission to change credit for good and improve support for people in debt. He is the author of ‘Britain’s Personal Debt Crisis: how we got here and what to do about it’, published in 2014. Damon has more than thirty years of experience providing, designing and commissioning services to meet the needs of disadvantaged groups and communities. He has also been involved in consumer campaigns at the national and international levels on issues of credit, debt and financial exclusion for two decades. These included successful campaigns to cap the cost of payday loans in the UK in 2015 and for rent-to-own lenders in 2019.  

Sommario

Preface.- Chapter 1: Introduction.- Chapter 2: Trust and power in the credit relationship.- Chapter 3: Reputation, risk, profit and indebtedness.- Chapter 4: Modern challenges and the need for ‘trust intelligence’.- Chapter 5: Conclusions and recommendations.

Info autore

Damon Gibbonsis the founder and the chief executive of the Centre for Responsible Credit, a UK charity on a mission to change credit for good and improve support for people in debt. He is the author of ‘Britain’s Personal Debt Crisis: how we got here and what to do about it’, published in 2014. Damon has more than thirty years of experience providing, designing and commissioning services to meet the needs of disadvantaged groups and communities. He has also been involved in consumer campaigns at the national and international levels on issues of credit, debt and financial exclusion for two decades. These included successful campaigns to cap the cost of payday loans in the UK in 2015 and for rent-to-own lenders in 2019.  

Riassunto

This book examines the nature of the relationship between lenders and borrowers from the perspective of trust and confirms the importance of trust in economics as it reduces transaction costs. Consumer credit use has grown considerably in the past twenty years, fuelled in part by technological developments to assess default risk and automate lending decisions. However, the need to collect and assess information regarding borrower ‘creditworthiness’ is costly, and the process of risk assessment, combined with risk-based pricing, can result in exclusion from the market for those who experience payment difficulties. This book details how levels of trust vary based on different transaction types and draws out the reasons why. Situating consumer credit within a typology of different levels of trust, it argues that this is heading in a direction of increased surveillance. The cost of operating an expansive surveillance system are high and can have negative (possibly unintended) consequences for consumer behaviour (e.g., reluctance to contact creditors when experiencing financial difficulty) which create externalities for other agencies. Summarising the findings from experiments designed to create more trusting relationships, this book argues that a fresh approach is needed and points to practical ways in which a more trusting consumer credit market could be developed. 
In doing so, this book calls for a rethinking of the credit risk assessment process. While it provides fresh ideas to increase levels of trust within the existing direction of travel of increasing data use, it also questions whether alternative approaches might provide for a better exchange of information between lenders and borrowers capable of improving risk assessment at a lower overall cost—and what that would look like. It is of interest to consumer credit lenders, credit reference agencies, financial regulators, academics and consumer bodies concerned with credit and debt issues.

Dettagli sul prodotto

• Autori: Damon Gibbons
• Editore: Springer International Publishing
• Lingue: Inglese, Tedesco
• Formato: Copertina rigida
• Pubblicazione: 11.05.2026
• EAN: 9783032139566
• ISBN: 978-3-032-13956-6
• Illustrazioni: Approx. 200 p. 5 illus., schwarz-weiss Illustrationen
• Categorie: Scienze sociali, diritto, economia > Economia > Singoli rami economici, branche; Management und Managementtechniken, Risikobewertung, Financial Services, risk management, transaction costs, Risk assessment, consumer credit, predatory lending, credit scoring, Over-indebtedness, risk-based pricing, irresponsible lending practices, economics of trust, creditworthiness