Category: Consumer law and policy

1. I wrote to Australia’s Treasurer recently agreeing we need re-regulation of Australia’s consumer credit markets, along the lines proposed in ‘The National Consumer Credit Reform Package’.
2. I considered some improvements that could be made regarding an External Dispute Resolution scheme. But I begin by supporting a key improvement proposed in the National Consumer Credit Protection Bill: imposing responsible lending rules (focused on ‘suitability’ and repayment capacity), drawing partly on my studies of Japanese law.

Continue reading “Responsible Consumer Lending Rules for Australia Too: Submission on the National Consumer Credit Protection Bill”

[Originally posted, with full hyperlinks, at http://eastasiaforum.org/author/lukenottage/]
The Kyoto Shimbun reported last Wednesday the first de facto victory by a consumer representative group in injunction proceedings regarding unfair contract terms. The same page mentioned the Education Ministry’s response to the recent death of a sixth-year elementary student, who choked on some bread provided in school lunches – basically, ‘chew well’! By contrast, Japan’s largest manufacturer of konnyaku (konjac) jelly snacks, MannanLife, halted all production after a one-year-old boy choked to death on 29 July.
But that situation is rather different. It also more directly highlights when and how a new Consumer Agency (shohisha-cho) might emerge in Japan. Ex-PM Fukuda’s Cabinet approved a Bill, but it then resigned without putting it through. It is unclear when and how PM Aso will submit a new Bill, and what line the opposition DPJ will now take, especially given the uncertainty about a possible early general election.

Continue reading “A New Consumer Agency for Japan? Consumer Redress, Contracts and Product Safety”

[Originally posted, with full hyperlinks, at http://eastasiaforum.org/author/lukenottage/]
In Japanese banking, the big boys are back, as I explained last week: The Economist now confirms it. Indeed, the latter suggests that “if Japanese banks have any unique skill, it may well be in coping with crisis”. Not an obvious point, as evidenced by the collective dithering after Japan’s financial markets collapsed in the early 1990s or the almost completely unexpected 1995 Kobe earthquake. But I suppose the Japanese can be very good at responding systematically, once they establish the broad parameters of the problem.
Anyway, Mitsubishi UFJ has now proceeded to take 21% of Morgan Stanley, and is now considering further integrating its securities subsidiary (involved in US$18.3b of M&A advisory work involving Japanese companies in 2007) with Morgan’s Japanese arm (which did $17.9b). This would challenge Nomura, which did $34.2b (“Aiming to Rival Nomura”, Asahi Shimbun, 4-5 October, p 25); but the latter has also snapped up Lehman’s operations in Asia (mostly Tokyo), hoping to retain many staff to grow its own business.
And on Friday, the US government finally agreed on a public bailout plan for up to $700b, which I reviewed critically earlier in the week. Along with $85b for AIG and $29b for Bear Stearns, this amounts already to 5.8% of GDP, “well above the 3.7% of the savings-and-loan bail-out in the late 1980s and early 1990s” and significantly less than the 24% of GDP committed by Japan after 1997.

Continue reading “The financial crisis – and loansharks in Japan and NZ”

[Originally posted, with full hyperlinks, at http://eastasiaforum.org/author/lukenottage/]
Australia’s Productivity Commission recommended in 2006 several ways to improve our consumer product safety regulatory regime, which dates back to the 1970s. In 2008 it published a more comprehensive Inquiry Report to strengthen our entire consumer law and policy framework. Several recommendations, like an obligation on suppliers to report serious product-related accidents to regulators, will start to bring Australia up to the higher standards expected and implemented in Japan since the 1990s. Those track the higher priority given recently to consumer protection particularly in the EU.
Japan and the EU illustrate the thesis of ANU Professors John Braithwaite and Peter Drahos that “global business regulation” can accommodate both economic deregulation of protected sectors domestically, and improved “social regulation” or a safety net for vulnerable groups of citizens. Japan also shares with the EU a greater concern about risks potentially affecting consumers or the environment. By contrast, as Berkeley Professor David Vogel has pointed out, since the 1980s the US has become much more concerned about risks to national security. Australia seems to have gone the same way. Yet such differing risk perceptions remain under-appreciated particularly in the Australia-Japan context.

Continue reading “Dodgy foods and Chinese dumplings in Japan”

[Originally posted, with full hyperlinks, at http://eastasiaforum.org/author/lukenottage/]
Japan’s recent re-regulation of unsecured consumer credit provides another major example of the growing consumer voice in law and policy-making in that country since the 1990s. It also highlights another “blind spot” in the Australian media’s coverage of Japan. This is despite similar underlying problems in this country, and a belated awareness of the risks involved in consumer lending following the sub-prime loans crisis in the US.

Continue reading “Consumer over-indebtedness in Japan, Australia and the US”