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Huls, Self-Regulation and Over-Indebtedness (Draft)

September 21, 2009 By: udo.reifner Category: 2009 Trento, Credit Law

Regulation and self regulation in the fight against over-indebtedness in the Netherlands. A socio-legal and economic anlysis.

Draft, Do not quote

Paper for the Conference in Chemnitz, March 26 –28 2009 on Overindebtedness: Everyday Risk in Modern Societies? Theoretical Aspects and Empirical Findings in International perspective (download)

Plus addendum for EUCOSO Trento, 25 –26 September 2009

Plan for future research in the light of the credit crisis

Nick Huls & Nadja Jungmann, Erasmus University Rotterdam

Comments are welcome, please mail them to

huls@frg.eur.nl

1. Introduction

In this paper we pick up the thread from two earlier joint publications. In 2003 we discussed the creation of the WSNP (Debt Rescheduling (Natural Persons) Act) and the legal evaluation by the WODC (Research and Documentation Centre)

in 2001. In our 2009 publication we discussed the most important findings from Nadja Jungmann’s dissertation: the significant decline in the success rate of the voluntary trajectory, the insufficient policy theory of the legislator, and the strategic behaviour of municipalities (withdrawal), creditors (saying ‘no’ to the voluntary trajectory is cheaper) and assistance workers (bureaucratisation of implementation). In this third paper we discuss the way in which the debt problems and credit lending are addressed and/or managed in the Netherlands by a combination of government and self regulation.

We begin this paper with an overview of the law and economics and socio-legal theoretical literature. We then discuss in section 3 the history of regulation and self regulation in credit lending and in section 4 the history of regulation and self regulation in debt assistance provision. In the closing section we formulate a few tentative conclusions which we link as much as possible to the theoretical literature from section 2. We also formulate a few other conclusions about the two policy fields.

2. Theoretical framework: general law and economics and socio-legal considerations

2.1 A general consideration of self regulation

Different definitions of self regulation are used in the Dutch literature. The economists Baarsma et al. use a broad definition:

‘Self regulation means that social parties themselves take a certain degree of responsibility for setting up and/or implementing and/or enforcing the regulations.’[1]

The civil lawyer Giesen uses this description as a starting point and formulates the following definition:

‘Alternative regulation means that social parties themselves take a certain degree of responsibility for setting up and/or implementing and/or enforcing the regulations, if necessary within a legal or judicial framework.’[2]

These definitions show surprising similarities with the definition given by legal sociologist John Griffiths for the semi-autonomous social field (SASF), at whose centre there is a group of people that jointly make regulations and also enforce them.[3] In his sociological approach, which focuses on the social effect of the law, the point of departure is therefore not so much the government that sets regulations, but rather the social institutions, the work place, concrete activities and practices, etc. This is relevant for setting regulations because in this ‘bottom up approach’, the primacy of the empirical reality is upheld, in which the central philosophy is ‘we all make rules’. In this vision, government regulation and self regulation constantly have an effect on each other.

In the literature, many forms of, reasons for and instruments of self regulation are distinguished, ranging from quality marks and certification to codes of conduct and gentleman’s agreements. In many analyses an emphatic distinction is made between types of self regulation in which the government is, is not or is only partly involved. In the following sections we discuss a number of categorisations that are used in disciplines such as law and economics and socio-legal studies.

2.1.1 Reasons for self regulation

Roughly three reasons for self regulation are distinguished in the literature:

  1. in order to avoid government regulation;
  2. in order to satisfy the intrinsic need in an industry or policy field;
  3. as supplement to existing regulation.

Self regulation is a means of avoiding government regulation

The first form is self regulation as alternative to government regulation. Alternative is used in the sense that both government regulation and self regulation are possible. It can be said that the motive behind this form of self regulation must be comparable to the motive behind government regulation. In the economic approach self regulation serves as alternative ‘in situations where in the absence of self regulation, government regulation would be necessary, since there is a case of market failure or political motives.’[4]

In this approach, self regulation is a substitute for formal regulation, where the four known forms of market failure provide the reason for regulation: lack of competition, information asymmetry, negative external effects and public goods. There is also attention to political motives for the use of self regulation, such as to counter the unequal distribution of prosperity, paternalistic motives (to stimulate desirable behaviour and discourage undesirable behaviour) and to counter social imbalance (such as high unemployment in a particular sector).

The government’s use of self regulation as an instrument to realise political goals takes place under the label of ‘conditioned self regulation’. Self regulation can also arise, for example, as the result of anticipating legislation, with the aim of preventing government intervention. The government can also force self regulation by threatening legal regulation. In the law and economics literature it is generally posited that self regulation can serve as alternative to legislation in the case of regulatory failure. This last situation arises due to complexity, information problems, transaction costs and economic costs.

Self regulation is a means of providing for needs in a (policy) field

The second category of self regulation involves those cases in which the motives for self regulation are the same as those for government regulation, but in which the self regulation in fact arises without a threat from the government. In such a case self regulation is not seen as an alternative to legislation. This can arise if the problem is not serious enough to justify government intervention, but a need for intervention is felt in the social field of influence. Motives for this form of self regulation by the relevant industry are, for example, the need to improve its image or to conduct business in a socially responsible manner. This category also includes self regulation that arises in situations where the government lacks the knowledge necessary for regulation.

Self regulation can supplement existing regulation

A third category is self regulation that has other motives than purely policy-related motives. Examples of this are self regulation initiatives whose primary purpose is to lower transaction costs by making use of uniform general terms and conditions and alternative dispute settlement. This last category involves a supplement to laws or legal procedures that are already in place and not an alternative to legislation.[5] In practice, such initiatives are not always easy to distinguish from the second category.

2.1.2 Advantages and disadvantages of self regulation

Different advantages and disadvantages of self regulation are mentioned in the general literature. Examples of advantages are:

  • there is specific knowledge required for regulation and the sector is stronger than the government in this respect;
  • self regulation is more flexible than legislation (which makes adjustments in the short term possible);
  • the transaction costs are lower for both businesses and the public;
  • there is greater willingness to comply;
  • there is less of a burden on the government apparatus.

Examples of disadvantages are:

  • the industry or policy field abuses its information head-start on the government;
  • the transaction costs are charged on to third parties;
  • there is the risk of restricted competition;
  • enforceability is limited.

2.1.3 Costs of self regulation

With regard to the costs of self regulation, see ‘Goed(koop) geregeld: een kosten-baten analyse van wetgeving en zelfregulering’ (Efficiently arranged: a cost – benefit analysis of legislation and self regulation) from SEO Economic Research. This report states that the regulation costs and compliance costs are lower with self regulation than legislation.[6] If 100% compliance is not necessary to promote public interests in an acceptable manner, self regulation is a good alternative from a cost perspective, say the authors of the report, because the costs of creating and enforcing legislation are usually higher than the costs entailed by self regulation.

This conclusion is also drawn in certain cases in the law and economics literature. Self regulation can have a cost saving effect both for society as a whole and the government in particular when the information needed for optimal standardisation and enforcement is present on the industry level but not on the government level. Another oft-cited cost argument is that with self regulation costs can be internalised while with government regulation the costs of standardisation and enforcement are at the taxpayer’s expense.[7] This argument is not strong in those cases in which the supervisory and enforcement costs are charged directly to the market participants.

2.2 Self regulation in a law and economics perspective

In the law and economics analysis of regulation and self regulation a distinction is traditionally made between the so-called ‘public interest’ approach and the ‘private interest’ approach. In the public interest approach, government action (or self regulation) is primarily seen as a means of countering market failure and therefore increasing social prosperity. In this vision, government action (or self regulation) is therefore regarded as an instrument whereby the government strives to increase social prosperity.

The private interest approach on the other hand assumes that the government does not, or does not only, aim to increase social prosperity, but rather enables the establishment of regulation or self regulation that serves the private interests mainly of powerful lobby groups. Politicians seeking to maximise prosperity reportedly promulgate regulation that provides advantages to private lobby groups in exchange for support for, among other things, re-election. In the law and economics literature, such public interest arguments are weighed and it is indicated under what circumstances self regulation can serve to increase prosperity. Traditional advantages that legal economists see are:

  1. With self regulation, use can be made of the greater expertise and technical knowledge available within the professional group, consequently information costs for establishing standardisation can be lower.
  2. For the same reason, enforcement costs will be lower because in the case of self regulation there is presumably stronger mutual trust. Moreover, it can be expected that companies will be more willing to comply with standards that have been reached in the context of self regulation.
  3. Since self regulation usually requires less time-consuming decision making procedures, standards can not only be agreed on more easily, it is also easier to change them.
  4. The administrative costs of self regulation are normally borne by the industry itself. The administrative costs can therefore be lower and the self regulation can be financed by charging these costs on to the relevant companies without disadvantaging the public finances.

Despite these possible advantages of self regulation, law and economic scholars see just as many disadvantages. These disadvantages are not just law and economics in nature, but are also noted by lawyers:

  1. Establishing standards via self regulation lacks democratic legitimacy because agencies that establish self regulation cannot be called to account for the content of the self regulation via the normal democratic control processes. This is especially seen as a disadvantage when the standardisation that is established through self regulation also affects the rights of third parties.
  2. Self regulatory agencies do not have an impressive record when it comes to public enforcement of the standards with respect to violators.
  3. The great danger of self regulation is that the professional group can consequently end up engaging in anti-competitive practices in fact. Restricting the possibilities of advertising can limit price competition for instance and, more generally, there is the danger that self regulation will be abused by the professional group to create restrictions on competition.

2.3 Self regulation in a socio-legal perspective

In sociology of law, the emphasis is on the mutual influence of political actors and self regulating groups. In a recent theme issue of Recht der Werkelijkheid[8] the editors – with reference to E. Ullman-Margalit – cite three ‘standard generating basic patterns’ that lie at the basis of the interaction between regulation and self regulation:

  • the prisoner’s dilemma;
  • the need for coordination;
  • a situation of inequality that is seen as unacceptable.

The editors devote also attention to enforcement and the question of to what extent self regulation is ‘law in the making’. From that perspective one can regard self regulation as a leg up for government regulation. This last view fits in with the deregulation discussion that has dominated legal political regulation discourse since the nineteen eighties. If there is less confidence in the problem-solving ability of the government, businesses and lobby organisations have more interest in self regulation.

The opposite also occurs now and again. In the 1992 legislative memo Zicht op Wetgeving (View on Legislation) from the Ministry of Justice, for the first time the government expresses its intention to pay more attention to the self regulating ability of society. In this memo, which is still topical, the concept of ‘legally conditioned self regulation’ is also developed, whereby the legislator gives the framework within which most relevant parties can proceed with some freedom to regulate their conduct and in which the government has an important role in enforcement. A striking example of this approach is the concept of good credit lendership from article 16 of the Consumer Credit Act (WCK), which in practice has been fleshed out by declaring the standards of the Honour Code of the Association of Finance Companies in the Netherlands (VFN) applicable to all credit lenders.

Worth mentioning also are the sociological studies from Van Waarden and De Vroom into the self regulation of manufacturers from the collective action perspective of Mancur Olson. Self regulation is then a form of collective interest promotion by the industry. The industry’s own rules are set up by the vanguard which wants to distinguish itself from the unorganised. These latter are often labelled ‘cowboys’, the less expert or quality-focused section of the industry. In this collective action approach, there is much attention to the problems that free riders can cause for the group as a whole.

The relationship between ‘insiders’ and ‘outsiders’ also plays a role in the establishment of so-called technical norms and standards for certain products. It emerges that often large companies sometimes argue for high and therefore costly standards that are unaffordable for small businesses. The technical norms can therefore have the function of pushing competitors out of the market.

Central to the socio-legal analysis is the notion that the opposition between government and self regulation cannot be made absolute. In a number of studies on negotiative legislating Stoter and Huls[9] have shown that much legislation these days is not imposed unilaterally (top down) by the state on its subjects, but is created in an interactive process of give and take between the government on the one hand and the organised business sector on the other. In the context of garnering support, the government is often dependent on the self regulating ability of organisations that know how to find their way to the government.

2.4 The position of the national government with respect to self regulation

As supplement to the socio-legal and law and economics approaches to self regulation, in this section we discuss two topics related to the position of the national government in self regulation:

The formal frameworks (where and how do policymakers and the legislator decide whether to use self regulation as an instrument);

The degree to which self regulation contributes in practice to the achievement of policy goals.

2.4.1 The formal frameworks in the Dutch policy and legislation process

On grounds of the applicable Instructions for regulations, a ministry is required to take the following steps before it proceeds to regulation:

  1. collect knowledge of the relevant facts and circumstances regarding the subject in question;
  2. determine as concretely and precisely as possible the policy objectives that are being aimed for;
  3. investigate whether the objectives chosen can be achieved by means of the self regulating ability in the relevant sector or sectors or if government intervention is necessary;
  4. if government intervention is necessary, investigate whether the objectives chosen can be achieved by amending or making better use of existing instruments or, if this proves impossible, which other possibilities exist to this end.

The value of this set of tests and protocols is limited by, among other things, the time at which they are used and their relative value in light of the political rationality of choosing legislation as instrument. Moreover, the element missing from these tests and protocols is an institutionalised feedback loop. There is no fixed standard for ex post evaluation to see whether the choice for a regulation instrument like self regulation has contributed to achieving the aim and whether the ex ante tests and protocols have helped in identifying the opportunities and threats that were inherent to the chosen instrument. That does not go to say that in reality no ex post evaluations take place, but that they are not in fact a fixed part of the policy cycle and therefore there is no automatic link between ex ante estimations and ex post evaluations either.

2.4.2 The material frameworks: prerequisites for successful use

For a government considering the use of self regulation as an instrument, the chances of success are important. It is not easy to estimate the degree of success and effectiveness of self regulation ex ante, but that is needed of course in an instrumental view on self regulation. In the literature we find three necessary, but not sufficient, conditions which the industry must satisfy in order to be able to establish successful self regulation:

  • there must be a certain level of knowledge present in the sector;
  • there must be support within the sector;
  • there must be an adequate degree of organisation in the relevant industry or professional group.

These conditions can be translated into motives. Support presupposes interest: the self interest of the business sector is cited as the main motive for self regulation. Only if the industry expects it will gain something from self regulation will it proceed to do it.[10] Self interest can express itself in the attempt to avoid legal regulation: if restrictions must be introduced, rather by means of standards set up ourselves. The industry may also try to improve its reputation by ascribing idealistic motives to its standards, or introducing a quality mark function by attaching clear quality requirements to participation.

With regard to the necessary conditions for self regulation as an instrument of government policy, Campbell has stated that it is necessary for the government to monitor in some way the institutions that establish standardisation through self regulation. This is called ‘audited self-regulation’ and entails that whenever powers for standardisation are transferred to a self regulating institution, the government should still keep a finger on the pulse, for instance with regard to verifying the soundness of the regulation and compliance. In particular, in this literature the following prerequisites for self regulation are mentioned.[11]

  • The self regulating institution must have both the expertise and the necessary motivation to perform the tasks delegated to it.
  • The government must have information and expertise in order to actually be able to monitor the activities of the self regulating institution.
  • The prerequisites must be set down by legislation, and this legislation must also indicate that precise, clear standards can only be established via self regulation.

This makes it clear that, according to this literature, self regulation only generates social advantages when the government determines and maintains the preconditions under which the self regulation functions. Positively formulated: if the government maintains control of the process, self regulation can be a good instrument of government policy. Ogus also stresses that when controlled self regulation is established in this way, it can play a useful role. He indicates that a means of doing this is by promoting competition between self regulating institutions. A method to that effect that is also cited by Ogus is accreditation or certification. On condition that there is competition in the relevant market, accreditation by a self regulating institution can offer a sign to consumers that accredited services or products satisfy certain minimum quality requirements. On condition that what is on offer is not limited to products or services that enjoy such accreditation from a single self regulating institution, accreditation (whereby also non-accredited products must remain on the market) could give information signals to consumers about distinct quality standards. In this way, conditioned self regulation could realise policy goals and at the same time stimulate competition.[12]

3 Self regulation and government regulation in consumer credit lending

According to the Financial Supervision Act (Wft), credit lenders must gather information about the consumer’s financial position before entering into an agreement in which credit will be extended. This takes place both by means of asking the consumer for information and consulting the system of credit registration to which credit lenders are statutorily obliged to take part in. The credit lender is also required to consult the credit register for credits in excess of €250. No credit may be extended if it emerges that extending such credit would be irresponsible from the perspective of preventing overcrediting.

3.1 Self regulation

The Wft states that no credit may be extended if extending such credit would be irresponsible from the perspective of preventing overcrediting. This is an open standard. It is preferred that the industry work out the details of this itself in a responsible manner. In practice this is fleshed out in two different ways.

By means of the income / expenses test. On the basis of information obtained about income and fixed expenses, it is calculated what the consumer has left over each month to spend on necessities. The credit lenders set this amount against the amount they feel necessary to be able to provide for one’s own livelihood (the minimum standard). The positive difference can be used for interest and repayment of the credit. Credit lenders can in individual cases deviate downwards from their own standards.

By means of credit score systems. It is mainly mail order companies (‘home shopping companies’) and credit card companies that make use of these kinds of systems. Credit lenders grant scores to the environmental and past behaviour information related to a consumer or group of consumers. These data can include: payment behaviour, town/city of residence, renter or homeowner status, family composition and age.

The AFM (Netherlands Authority for the Financial Markets) tests whether the way in which the open norm has been given concrete form can be regarded as responsible. The AFM can also indicate in advance what concrete implementation of the norm is responsible. The credit lender may deviate from this as long as he can demonstrate that his form of implementation is also responsible (the ‘comply or explain’ principle). Agreements on giving concrete form to the open norm are made between the AFM and the various credit lenders or their organisations, such as the Association of Finance Companies in the Netherlands (VFN), Netherlands Bankers’ Association (NVB) and the Netherlands Home Shopping Organisation (NTO), mainly comprised of mail order companies. In the report ‘Verantwoorde Kredietverstrekking 2006’ (Responsible Credit Lending 2006) the AFM looked into whether the income/expenses test used led to irresponsible credit lending. The VFN standard (positive difference of income minus expenses, below which no credit is issued) was below the social assistance benefit level. Most of the credit lenders investigated maintained an even lower minimum standard than the VFN standard. The AFM also ascertained that credit lenders had set down insufficient policy, if any, to state when the lender’s own standard can be deviated from. On the basis of these observations, the AFM deemed that irresponsible credit lending was taking place. The AFM entered into consultation with two organisations from the credit industry, the VFN and the NVB, in order to come up with an improved Code of Conduct. In response to this consultation it was agreed that the VFN standard would be revised. The AFM wants to apply the new norm industry-wide, and consequently no distinction will be made between members of the VFN and NVB and non-members. In the meantime the VFN has published a new Code of Conduct which ensures compliance with the agreements. In this new Code of Conduct, among other things, the basic norm is increased and made income-dependent.

The use of credit scoring systems also leads to irresponsible credit lending, according to the AFM, because no individual information from the consumer is involved. Consultation was held with the NTO regarding this.

In order to be able to conduct a creditworthiness test properly, a system of debt and credit registration is important. Firstly the Credit Registration Agency (BKR) plays a large role in this. The BKR foundation was established in 1965 by the financial business sector in order to manage and provide the Central Credit Information System (CKI). The BKR therefore provides the central credit registration system in the Netherlands. If a consumer cannot agree with a participant on how his information is reported, he can appeal to the BKR Disputes Committee. This committee consists of independent experts in the area of privacy legislation and credit lending who look into whether a participant and the BKR have adhered to the BKR regulations. The decisions of the Disputes Committee are binding. The minister of finance can engage in consultation with the BKR, but has no direct control over the agency. The AFM supervises that all credit lenders take part in a system of credit registration.

A recent evaluation reported plans to expand the system of debt and credit registration with the National Debts Information System (LIS), a register of payment arrears. Finance Minister Wouter Bos said in a letter to parliament regarding this market initiative:

‘Credit lenders have the legal duty to test the creditworthiness of consumers (art. 4:34 of the Financial Supervision Act). Partly because of this, it is part of the responsibility of the market itself to make the expansion of debt registration a success. After all, the market has the necessary consumer data (debts or arrears in payments on debts) to enable expansion of debt registration. (…) It stems from this that the most appropriate way to give this initiative concrete form is in private law. I will however continue to watch the progress of this market initiative closely and I will try to support the initiative where I can by, for example, deploying legal expertise.’

The system will fall under the Stichting LIS. This foundation is established by a market initiative for ‘expanding debt registration’ started by the NVB, VFN, NVVK (Dutch Association for Lending to Private Individuals), Aedes association for housing corporations, EnergieNed, the VNG (association of Netherlands municipalities), home shopping organisations and the Salvation Army. This system was expected to be available as of 1 January 2009, but as a result of objections on the part of privacy authorities, that deadline was not met and it is not yet clear if and when the system will be in place.

The results of the quick evaluation by the AFM shows that the creditworthiness test is the most important instrument in the process that results in consumers being granted credit or not. In discussion with the AFM, the VFN’s self regulation was tightened up and subsequently elevated to a norm for all credit lenders. The acceptance policy of credit lenders is therefore not left to the credit lender’s own insight but is standardised by the government. Since the acceptance policy forms the basis for the credit lending – and moreover there is a statutory cap on the interest that credit lenders may charge (maximum interest rate) – there is not so great a need for additional self regulation.

The open norm of ‘good credit lendership’ was fleshed out by the legislator with the Honour Code of the VFN, in accordance with the WCK, thus providing a first example of ‘legally conditioned and structured self regulation’. On the one hand the legislator indicated that he ‘didn’t want to sit in the banker’s chair’, and on the other hand the legislator offered support to a self regulation initiative that the VFN had already taken in the nineteen seventies when the industry was cast in a bad light because of the actions of a few fraudulent credit lenders[13] . The Honour Code of the VFN was ‘declared generally applicable’, as it were. Foreign licence holders were thus also faced with Dutch self regulation.

Credit brokers

A problematic aspect of the WCK was that the law only applied to credit brokers to a very limited extent. Investigation by SWOKA (institute for consumer research) had shown that aggressive credit brokering often led to overcrediting, but a registration system for brokers was scrapped because of deregulation considerations. When the supervision of Economic Affairs weakened as time passed, credit brokers had more and more freedom.

Expert and independent credit brokering in and of itself is a useful economic activity, but in practice the broker’s conduct was often not primarily steered by finding the most inexpensive loan for the consumer but rather the highest commission for himself. Incidentally, under the WCK the payment of the commission to the brokers was regulated.

Two other forms of self regulation in the area of credit lending deserve mention here.

Self regulation of mortgages

When, during the parliamentary discussion of the WCK, there was a vote to bring a part of the mortgage market under the law as well, the banking sector offered to regulate this topic under its own management on the basis of self regulation. After intensive negotiations between the Ministry of Economic Affairs and the NVB, this resulted in a strong piece of self regulation, the Code of Conduct for Mortgage Financing, which – in an adapted form – continues to be in effect to this day.

Cooperation with the NVVK’s Code of Conduct for Debt Settlement

On the basis of a gentlemen’s agreement, VFN and NVB members loyally worked according to the Code of Conduct for Debt Settlement of the Dutch Association for Lending to Private Individuals (NVVK). When the voluntary regulation in the context of the WSNP was reinforced by a legal procedure, this diminished the willingness of commercial banks to continue to cooperate with the existing self regulation[14].

4 Self regulation played an important role in the development of the Dutch system of debt assistance

In the past decades, self regulation played an important role in the Dutch system of debt assistance. Characteristic elements such as the division into an voluntary and legal trajectory and a three-year term for debt settlements can be directly ascribed to the self regulation that took place. In this section we describe how the most important acts of regulation by the government and self regulation alternated with each other over the years. Looking back at the past 15 years, in the last section we ask ourselves the question of whether the impact of regulation in that period was not significantly greater than the impact of self regulation. In table 1 we summarise and briefly describe the most important acts of regulation and self regulation.

Year

Regulation or self regulation

Adjustment

1896

Regulation

Bankruptcy Act is opened up for consumers

1939

Self regulation

Municipal Credit banks offer a pragmatic solution for debt situations by introducing debt management credits

1979

Self regulation

The Code of Conduct for Debt Settlement is introduced, thus providing a set of agreements between debt assistance organisations and creditors

1989

Regulation

Parliament calls for a legal debt settlement scheme and in 1992 the proposed bill is submitted (WSNP)

2000

Self regulation

By amending the Code of Conduct for Debt Settlement and standardising the calculation of repayment capacity, the field tries to increase the effectiveness of the voluntary trajectory

2004

Regulation and self regulation

Regulation by submission of proposal to amend WSNP to limit admissibility in court and simplify procedure and self regulation by:

· reaching various covenants between debt assistance organisations and creditors;

· implementing demand-based way of working;

· developing system certification;

· setting up early warning system (National Debts Information System).

2007

Regulation

The national government names itself as the responsible party for the system of debt assistance and announces the introduction of a legal duty of care for municipalities

Table 1 Years in which regulation or self regulation with regard to debt assistance took place

1896 regulation: opening up the Bankruptcy Act to consumers

Debts are timeless. In order to offer natural persons a solution for the often hopeless situation in which they found themselves, in 1896 they were given the possibility of appealing to the Bankruptcy Act. Since the bankruptcies of natural persons yielded little for creditors in practice, most were quickly concluded ‘for lack of assets’. The creditor could then write off its claims or wait for better times in which it could once again request the bankruptcy of the debtor. In retrospect the opening up of the law had a counterproductive effect: it did not offer consumers the way out they needed but did give creditors an extra incentive to force payment. Many debtors regarded a bankruptcy as a disgrace and therefore paid as much as they could to avoid going to court. There was a case of ‘bankruptcy of the bankruptcy’.

1939 self regulation: municipal credit banks offer a pragmatic solution for debt situations

Credit lending to private individuals slowly started to pick up in the Netherlands in the nineteen twenties. The credits were not used to buy consumer goods, but investments like tools or a sewing machine, for example, in order for the individual to earn something extra. Exorbitant interest rates were often charged for the credits. Partly under the influence of the 1929 crisis, a growing group of consumers was facing irresolvable problems with repayment. With the lack of a properly functioning bankruptcy act, more and more municipal credit banks started to offer a pragmatic solution in the form of debt settlement credits. The bank issued a credit with which the debtor paid off his debt in one go. The credit bank charged a lower interest rate (and gave a longer repayment term), and consequently the debtor was, once again, able to honour his obligations.

In 1939 the umbrella organisation of credit banks proposed that the issuing of debt settlement credits as an answer to problematic debt situations be organised on a more structural basis. This is the first self regulation that takes place in the area of debt assistance.

1979 self regulation: the Code of Conduct for Debt Settlement lays the foundation for the current system of debt assistance

Despite the initial start at the end of the nineteen thirties, it took until the nineteen seventies before debt assistance really became a core task of municipal credit banks (GKBs). In 1979 the umbrella organisation of credit banks and the most important creditors (the commercial banks) set up the Code of Conduct for Debt Settlement. This contained agreements about the details of debt settlements (such as repayment term, repayment capacity and equality before the law of creditors). The reason for setting up the Code of Conduct was that the need for debt assistance in the Netherlands had risen significantly in the nineteen seventies. This rise can be explained by the increased use of consumer credit in the nineteen sixties and the beginning of the nineteen seventies and the number of households that were consequently facing financial problems and had turned to credit banks for help. The recession in which the Netherlands ended up at the end of the nineteen seventies reinforced the need for debt assistance.

The immediate reason for setting up a national code of conduct was the existence of large differences in the conditions that the GKBs set for the issuing of debt settlement credits. For example, similar debt settlements involved different interest rates and repayment terms. Requests for (partial) forgiveness of claims were also treated differently. When the number of debtors that asked for help was still limited, these differences were not a problem. The need for standardisation arose when nationally operating creditors received debt settlement proposals that differed significantly from each other in terms of substance and complained about this to the individual credit banks.

The Code of Conduct for Debt Settlement is an important milestone in the development of the Dutch system of debt assistance. The ‘gentleman’s agreement’ between the regular commercial banks and credit banks initially gave a great boost to the effectiveness of debt assistance and laid the foundation for our system of debt assistance that consists of an voluntary and a legal trajectory.

The Code of Conduct was set up by credit banks, but in the years that followed it also became the central document in the debt assistance that social services and social work institutions started offering. In the nineteen eighties these organisations also started offering debt assistance in the Netherlands when they realised independently of each other that problematic debt situations got in the way of the help they offered. Thus, the social services and social work institutions kept the system developed by self regulation intact.

At this point it is important to note that the Code of Conduct for Debt Settlement played an important role in the standardisation of implementation, but that this did not mean that in practice the implementing organisations started working entirely uniformly. The Code of Conduct contained agreements on the way in which most of the cases were handled, but at the same time offered discretionary latitude to deviate from these agreements. The agreement regarding the repayment term, for instance, was that ‘theoretically’ a debt settlement lasted 36 months.

1989 regulation: politics calls for a legal debt settlement scheme

In practice, the debt assistance organisations could offer a solution to about half of the debtors asking for help. The others had no other choice but to repay their debts, since even one hundred years after being opened up to consumers, the Bankruptcy Act still did not offer them any solution. This situation changed during discussion of the new legislation governing attachment (Act regarding the attachment of earnings, social benefits and other periodic payments, the Bleu Act) when the House of Representatives passed a motion asking the government for a legal provision that offered debtors a debt-free future. Such a provision was requested precisely at this point because the introduction of the Bleu Act meant that benefits recipients’ income could also be attached and their vulnerable position could mean that they could relatively often end up in a hopeless debt situation as a result. The parliament-wide support for the introduction of the Bleu Act offered a ‘window of opportunity’ to not only prevent the position of debtors from deteriorating, but in fact to ensure that the position of debtors would improve.

In 1992, the state secretary at the time, Kosto, submitted the bill for the Debt Rescheduling (Natural Persons) Act (WSNP) to the House of Representatives. In the bill, the results of a study by Huls into the applicability of the Bankruptcy Reform Act to the Dutch system[15] and a study by the Mijnssen Commission into possibilities of amending the Bankruptcy Act could clearly be recognised. In the context of regulation and self regulation it is important to note that with the legislative proposal for the WSNP, the government made a choice for regulation that supplements the existing system of self regulation. With the WSNP the legislator wanted to design a regulation that is an incentive for creditors to cooperate more often with an voluntary debt settlement.[16] In the explanatory memorandum, the legislator mentions a number of elements from a legal debt settlement that in its view should lead to creditors cooperating more often with voluntary settlements. The effect of that must be that the success rate in the voluntary trajectory should rise.

2000 self regulation: by adapting the Code of Conduct and standardising calculation of repayment capacity, the field tries to increase the effectiveness of the voluntary trajectory

Soon after the WSNP came into effect, it emerged that the effectiveness of the voluntary trajectory, which had functioned reasonably successfully until that point, did not increase but in fact declined due to the introduction. An insufficient policy theory from the legislator, strategic behaviour by municipalities (withdrawal), creditors (saying ‘no’ to the voluntary trajectory is cheaper) and assistance workers (bureaucratisation of implementation) led to the success rate in the voluntary trajectory, just under forty percent when the law took effect, falling to a historical low of 9 percent in 2004[17]. Thus, the national government’s regulation which was supposed to lead to a higher success rate in the voluntary trajectory had a counterproductive effect in this case.

The umbrella organisation of credit banks (the NVVK) responded to the falling success rate with two actions that can be qualified as self regulation:

  • adjustment of the Code of Conduct;
  • consultation with the delegated judges in bankruptcies in order to equate the height of repayment capacity in the case of voluntary debt settlements with the height of repayment capacity in the case of legal settlements.

Characteristic of the amendments to the Code of Conduct is that the existing discretionary latitude was taken away, with the aim of further standardising the implementation practice. With this the NVVK wanted to reduce or even eliminate differences in implementation between voluntary and legal debt settlements so that as a result the WSNP would constitute a stronger incentive as a kind of ‘big stick’. In the old version of the Code of Conduct for example, it was stated that theoretically debt settlements lasted 36 months. There were organisations that deviated from this quite often. By including in the new Code of Conduct that debt settlements always lasted a maximum of 36 months, the implementation was equalised with the implementation practice of the WSNP.

In addition to amending the Code of Conduct, the NVVK also tried to limit the counterproductive effect of the WSNP in other areas by self regulation. Soon after the introduction of the WSNP it emerged, for example, that the courts were stricter in their calculation of the repayment capacity than the credit banks. The result of that was that creditors received a higher repayment from a legal debt settlement, this making these settlements more attractive. This difference was eliminated by making agreements with the judiciary on how the calculations were made.

2004 regulation: a legislative proposal to amend the WSNP and self regulation by covenants, working in a demand-based way and guaranteeing quality in the voluntary trajectory

In 2001 the Ministry of Justice evaluated the impact of the WSNP and its effects on the voluntary trajectory.[18] The legal evaluation did lead to discussion on changing the WSNP, but not to a concrete legislative proposal. In 2004 the Ministry of Justice chose to change a number of sections of the WSNP.[19] An important reason for this was that Recofa, the professional organisation of bankruptcy and debt settlement judges, had written a letter to the Ministry of Justice in 2003 with the request that admission to the legal trajectory be restricted. The first-line judges said it was too easy for debtors to be admitted to the court and the courts were in danger of collapsing under the administrative burdens of the WSNP.

In addition to limiting admission to the courts, the amendments to the law were also intended to result in:

· the procedure of legal debt settlement becoming simpler (so that the burden on the courts would decrease);

· the success rate in the voluntary trajectory rising once again.

In order to achieve a higher success rate, the legislator introduced three instruments:

  • a compulsory debt settlement (art. 287a Fw (Bankruptcy Act));
  • a moratorium art. 287b Fw;
  • provisional relief (art. 287 lid 4).

In the event of compulsory debt settlement the debtor can ask the judge to impose a debt settlement on creditors. If the judge awards the request, a debt settlement is established on a compulsory basis.

The moratorium is an instrument by which creditors are forced to temporarily suspend their collection actions. It offers the debt assistance organisation the time to start up or continue a proper voluntary trajectory, without being hindered by the collection measures of individual creditors. A moratorium can be applied for at any moment when there is a threatening situation. The law says this is the case in one of the following situations:

– an eviction;

– termination of the supply of gas, power or water;

– termination or dissolution of health insurance.

Provisional relief can be applied for if the voluntary trajectory is (almost) completed. Provisional relief can prevent a creditor from getting an execution order for eviction or termination of utilities or health insurance just before a request for application of the WSNP is submitted.

The legal amendments to the WSNP took effect on 1 January 2008. In particular the change to the admission requirements had major effects. The number of WSNP cases was approximately 40 percent lower in 2008 than in the previous year. Table 1 shows that this decrease means a break in the trend in the annual increase that took place since the law took effect.

Figure 1: Number of debtors that were admitted to a legal debt settlement in the 1998-2007 period

The year 2004 was not only dominated by the changes to the regulation under the WSNP. It was also characterised by the historical low in the success rate of the voluntary trajectory of 9 percent. All parties involved (debt assistance organisations, ministries, national politics and the judiciary) realised that something also had to happen in the voluntary trajectory. In addition to the proposed legislation, the field of debt assistance responded with four self regulation initiatives to increase the effectiveness of the voluntary trajectory:

  1. the conclusion of covenants with different creditors;
  2. introduction of a new, more demand-based working method;
  3. development of a system of certification to guarantee the quality of implementation;
  4. establishment of an early warning system in which arrears are registered (National Debts Information System).

1. The cooperation of certain creditors is guaranteed on the basis of covenants

In the past years, the NVVK and municipalities concluded covenants on the national and local levels, respectively, with important players such as:

· the Central Judicial Collection Agency;

· water supply companies (Vitens);

· power companies (Essent, Eneco, Nuon);

· telephone companies (UPC);

· mail order companies;

· housing corporations;

· health insurers;

· etc.

The covenants contain agreements on the terms and conditions under which the relevant creditors cooperate with debt settlements and sometimes also on prevention: for example, after just two months of non-payment a power company passes on the name of a customer to debt assistance and if debt assistance then tries to reach an voluntary settlement, the power company always cooperates. These kinds of agreements are a form of self regulation. It is currently not yet clear to what extent the covenants have since contributed to a higher success rate.

2. The turnaround from supply-based to demand-based working offers the possibility of providing more customised service

A second way in which the NVVK is trying to increase the effectiveness in the voluntary trajectory is by introducing a new way of working. The development of this began around 2005 at a number of individual banks who investigated whether they could increase their success rate by working differently. Characteristic of the new way of working is that the debt assistance organisations changed over from a supply-based working method to a demand-based method and debtors who are still unable to satisfy the demands that organisations put on them can make use of a stabilisation trajectory aimed at eliminating any impediments.

By no longer automatically offering a debt settlement, but by looking on a case by case basis whether a debtor is in fact able and willing to satisfy the conditions of a debt settlement, the implementing organisation can offer customised service. There has still not been any thorough study into the question of whether the new working method contributes to a higher success rate. The organisations that use the new working method do ascertain that the drop-out rate is falling. Whether and to what extent the success rate is increasing is not yet clear. The new way of working does include the risk that debtors end up in a stabilisation phase for a long time and that while they do not drop out, nor do they have the prospect of a debt free future.

3 Certification must lead to quality effort but has run aground for the time being

A third initiative to increase the success rate in the voluntary trajectory is the development of a certification system. The idea is that certified organisations work according to standards that guarantee a minimum quality of implementation. In the current situation there are substantial quality differences that prompt especially nationally operating creditors to not cooperate with an voluntary settlement but to steer for the much more uniformly implemented legal debt settlement.

The development of the quality standards can be regarded as self regulation. Parties from the field developed standards for debt assistance under the leadership of an independent standards agency. Parliament was responsible for kicking off this trajectory however. In the past ten years, the House of Representatives has asked several times that quality requirements be imposed on the voluntary trajectory or that the field be spurred to introduce certification. Repeatedly the government’s answer to this was that it wanted to leave such matters to the industry itself. In the discussion of the amendments to the WSNP in autumn 2004, parliament saw its chance and passed a motion[20] stating that if the industry would itself not formulate quality agreements, the government should include quality requirements for implementation in the WCK. This motion led to the Ministry of Social Affairs and Employment making a subsidy of 200,000 euros available for the field to develop standards[21].

At the end of 2008 the standards were definitively determined but the date of introduction was still not known. The reason for this is that there is limited support among debt assistance organisations.[22] A substantial group of debt assistance organisations object to the developed standards on two points. The first objection regards an extension of the repayment term for a quarter of the debtors with the highest incomes. The second objection regards the costs of certification. These costs will be high and many organisations are currently asking, certainly in light of the pressure on government spending because of the credit crisis, whether the added value of certification outweighs the costs.

4. Introduction of an early warning system (National Debts Information System)

For explanation see the paragraphs on this in the section on credit lending.

2007 regulation: the national government is responsible party in the system and is preparing a duty of care

In the years after 2004, therefore, hard work was undertaken to increase effectiveness in voluntary debt assistance. Considering the increases since then it seems as if the covenants and the new way of working have actually had the envisioned effect (see figure 2).

Figure 2: Development in the success rate in the 1992-2007 period

The national government regards a success rate of around twenty percent as insufficient and wrote to parliament in autumn 2007 that it regarded itself as the party responsible for the whole system of debt assistance (voluntary and legal trajectory together) and would undertake investigation into the possibilities of increasing the effectiveness of the voluntary trajectory.[23] This represented its first decision to develop regulation related to the implementation of the voluntary trajectory. The investigation provided insight into the causes of the low success rate and an extensive set of recommendations to increase effectiveness. [24] The ministry adopted most of the recommendations. The most important recommendation is to formulate a legal duty of care for municipalities. This must lead to, among other things:

· accessibility to debt assistance for all Dutch citizens with debts;

· limiting of the waiting and throughput times;

· an integrated approach to problematic debt situations;

· a sort of basic package of services and products of a certain minimum quality offered by every municipality.

The duty of care must, like certification, lead to more confidence in implementation on the part of creditors and on the basis of that to greater willingness among creditors to cooperate with voluntary debt settlements.[25] In November 2008 the House of Representatives approved the resolution to introduce a legal duty of care with broad support. The Ministry of Social Affairs and Employment is expected to submit a legislative proposal to parliament at the end of 2009.

5 Concluding considerations

What fascinates us to an increasing degree in policy fields such as credit lending and debt assistance is finding the most effective use of self regulation and government regulation. The numerous legal amendments and strategic policy adjustments that we mentioned in the last two sections can largely be ascribed to changing policy insights and party political preferences, which in turn are affected by economic changeability. In that sense, both the policy in the area of credit lending and in the area of debt problems fit in well at this ultramodern juncture in time. Still we cannot disabuse ourselves of the impression that different initiatives with varying success can also be ascribed to the fact that the Netherlands has still not found a smart mix of self regulation and government regulation.

5.1. Consumer credit

In the world of consumer credit lending, the self regulation of lenders has become more and more strictly conditioned. In the framework of the deregulation and market functioning policy, the government took a step back and left more to the market and at the same time created a new regulator, the AFM, whose task it was to keep a close eye on the conduct of lenders.

The AFM supervises, among other things, the self regulation and has succeeded in persuading the industry to tighten up requirements. Unlike the prudential supervision by the DNB, which is based on mutual trust and a ‘like knows like’ attitude and ‘good sportsmanship’, the AFM functions more as an assertive accountant who also watches over the details in its supervision of conduct. In name, the financial sector still writes some its own self regulation, but the regulator keeps a firm grip on the hand that writes. This is therefore a form of audited self regulation.

The climate for self regulation in the credit sector has become less favourable because of the internationalisation of banking. Foreign lenders have a difficult time getting used to all these agreements that banks in the Netherlands make amongst each other in the public interest. Elsewhere self regulation agreements are seen as cartel-like behaviour.

5.2. Debt assistance

In the field of debt assistance, self regulation has played an important role for almost sixty years but only the Code of Conduct for Debt Settlement of 1979 has really been a success. The field has not succeeded since then in substantially improving its own achievements through self regulation. The new initiatives have had unclear or limited effects or no effects at all:

  • amendment of the Code of Conduct in 2000 had a counterproductive effect;
  • equating the calculation of repayment capacity in the voluntary and legal trajectories prevented the success rate from falling further;
  • it is not clear whether and, if so, which effects the covenants between debt assistance organisations and creditors have had;
  • it is not clear whether and, if so, which effects the implementation of a demand-based working method have had;
  • the field is not currently succeeding in developing a certification system for which there is support;
  • the field is not currently succeeding in setting up an early warning system (National Debts Information System).

When we look at government regulation we see that the three moments of regulation all had drastic effects:

  • the opening up of the Bankruptcy Act in 1896 gave creditors an extra incentive to spur debtors to pay;
  • the introduction of the WSNP in 1998 unintentionally led to a decrease in the success rate in the voluntary trajectory;
  • the tightening up of the admission criteria of the WSNP as of 1 January 2008 led to a much stronger decline in the number of WSNP cases than foreseen.

We draw the following tentative conclusions:

· self regulation is a frequently tested instrument, but the effects of it are limited;

· the government does not often introduce regulation, but the impact of it is great and the consequences often unintended;

· as equal treatment of creditors becomes more important than customised service for the debtor, legal settlement scores better than self regulation.

5.3. Reflections for the future

The credit crisis means that assisting consumers with excessive debt is high on the political agenda at both the national and municipal level. In the Netherlands a number of large banks have been partly nationalised and that has led to broader government involvement. That could lead to interesting policy dilemmas.

5.3.1 Stimulate credit use?

From a macro political perspective it is important that consumers start spending again and that requires that they gain confidence in the future. Car manufacturers for instance are currently offering consumers extremely favourable financing options in order to jumpstart stagnant sales. Stimulating buying on credit increases the demand for consumer goods and governments are expected to support this policy. A very restrictive acceptance policy on the part of banks and financers does not fit in with this kind of policy. From such a policy perspective it is rational to abandon or significantly increase the maximum rate for consumer credit.

Mail order companies will perhaps be able to take the opportunity to promote their credit score systems as an alternative to the maximum rate. With their profiling techniques, mail order companies have advanced methods to predict and manage non-payment.

Debt assistance organisations in the Netherlands ascertain currently that people who need a limited amount of credit for a relatively small financial setback often have problems securing such credit and consequently end up in financial difficulty. These consumers are people who until recently would have had no problem getting credit. Shutting off the credit tap causes difficulties for this group.

5.3.2 New target groups for debt assistance

We expect that in the months ahead, a different group of highly educated consumers will also be facing financial problems as a result of the credit crisis. They will not be so interested in learning to handle money, which is a central theme in debt assistance at most debt assistance organisations, but rather in solving their problems in a business-like manner. This will of course put new, that is business-like, demands on the work of those providing help in the voluntary trajectory.

5.3.3 Hardening and professionalising collection

We have long known that debt assistance and collection are two sides of the same coin. The credit crisis will most likely make the collection of debts more difficult. The collection industry has become increasingly commercial and professional. Large, internationally operating players like Intrim Iustitia dominate the market.

In our opinion the government must strengthen the function of the bailiff, a public officer, vis-à-vis the private collection agencies, among other ways by legally conditioning and anchoring the self regulation of the professional organisation.

In November 2008, under pressure from parliament, the Minister of Justice promised that legal regulations would be introduced to regulate the collection industry. In April of that year he had still been of the opinion that this was not necessary, but he had to review his position after the LOSR report, which clearly showed major abuses in the collection industry.

He saw two possibilities:
– a ministerial regulation on grounds of article 6:96 of the Netherlands Civil Code;
– blacklisting of clauses not admitted (article 236 book 6 of the Netherlands Civil Code).

5.3.4 Credit registration

Efforts are now being made in the Netherlands to link a private law institute, the BKR, with a public initiative, specifically the National Debts Information System. This would make the BKR an excellent meeting point of self regulation in the credit and debt assistance spheres. In exchange for opening up the BKR to debts other than credit debts, the BKR insisted that the government offer creditors access to the municipal personal records database (GBA). We do not know for certain at the moment whether the objections of the Privacy Chamber will block this proposed policy deal.

Future research

The present credit crisis and its societal consequences present a good opportunity to evaluate the history of the policies in the field of consumer credit and consumer bankruptcy. We will examine the Werdegang of the regulation in a historic perspective using Udo Reifners concept of ‘waves of regulation’ in our 1994 study for the European Commission. The unit of analysis is Dutch law and policy, but we will put them in an international perspective, if feasible.

1. Consumer credit and mortgage credit as lifetime contracts

usury as a moral and legal phenomenon;

– (full?) enforcement of contracts and pacta sunt servanda

– (new) forms of securities, developed by creditors

– who asked for help from government (debtors or creditors) and what were the arguments?

– bankruptcy as a solution to problems of collective action (preventing Rob Peter to pay Paul)

– bankruptcy as a litmus test for the binding force of contracts

2. Four waves of regulation

First wave at end of the 19th century: The Dutch Bankrupcty Act 1896 as an attempt of dealing with debt and debt enforcment in a civil (and not penal) way) for private individuals (i.e. non merchants). In that period of time the inability tot pay one’s debts was not considered to be legal relevant (Geld muss man haben), but a matter of charity. Bankrupcty was conceived as a fair distribution of property between the creditors,

Second wave: the Great Crash of 1929. In the 30-ies we see the regulation of usury, the creation of social banks and the ban on abusive clauses in contracts. Also the idea of reorganisation (succession of payments) was instituted in the law (only for merchants).

Third wave: regulation of credit as an engine for the mass consumer society. In the sixties and 70-ies big financial institutions became involved in the extension of consumer credit. Credit-taking was normalized and encouraged. Consumer protection became important as an integral part of the ‘sound’ development of the credit society.

Fourth wave: Consumer bankruptcy c.s. as a remedy for the accidents of the credit society (1980-ies and 1990-ies). As a result of massive deregulation-efforts financial markets were liberalized in order to facilitate one massive European financial market. Supervision was delegated to new (non political) institutions. New technolgies (credit cards) supported the use of credit.

According to the Zeitgeist ( limiting the social welfare state) politicians were looking for private alternative safety nets, American style consumer bankrupcty became a viable social policy with few costs for the taxpayers.

In this period European law became more important (second banking directive, home country control)

3. Institutional context

For each wave we will make an institutional analysis of:

relative force of (organizations of) debtors and creditors

intermediary organizations: Credit broking, Credit Registration

social banks

bailifs and private debt collection

political response, both ideological and practical

role of selfregulation

  1. Evaluation and conclusions: towards a fifth wave?

Which lessons may be drawn from the present crisis, what is the agenda?

Rotterdam, september 21 2009

Literature

AFM, Verantwoorde Kredietverstrekking (Responsible Lending) 2006, Amsterdam: Autoriteit Financiële Markten 2007

I. Ayres & J. Braithwaite, Responsive Regulation – Transcending the Deregulation Debate, Oxford: Oxford U.P. 1992

Baarsma, B. et al. Goedkoop geregeld: een kosten baten analyse van regelgeving en zelfregulering, SEO rapport 720, Amsterdam 2004

R. Baldwin & M. Cave, Understanding regulation: theory, strategy, and practice, Oxford/New York: Oxford University Press 1999

A.J. Campbell, “Self-regulation and the media”, Federal Communications Law Journal, vol. 51, 1999, 711-772

B. Dorbeck-Jung & M. Oude Vrielink van Heffen (red), ‘Op weg naar bruikbare zelfregulering’, Recht der Werkelijkheid, 2006

M. van Driel, Zelfregulering: hoog opspelen of thuisblijven, Deventer: Kluwer 1989

I. Giesen, Alternatieve regelgeving en privaatrecht, Deventer: Kluwer 2007

J. Griffiths & H. Weyers, De sociale werking van recht : een kennismaking met de rechtssociologie en rechtsantropologie, Nijmegen: Ars Aequi Libri 2005

N. Gunningham, P. Grabosky, with Darren Sinclair, Smart Regulation. Designing Environmental Policy, Oxford: OUP 1998

N.J.H. Huls, “Zelf- en overheidsregulering in het bankwezen”, Regelmaat, 1987, 9-14

Nick Huls, Towards a European Approach to overindebtedness of Consumers, 16 Journal Consumer Policy (1993), p. 215 – 234

Nick Huls, Nadja Jungmann & Bert Niemeijer, Can Voluntary Debt Settlement and consumer bankruptcy co-exist? : in Johanna Niemi- Kiesliainen, Iain Ramsay & William C. Whitford (Eds), Consumer Bankruptcy in global perspective, 303 -318, Hart Publishing 2003

Nick Huls & Nadja jungmann, Debt counselling in the shadow of the court, in: Johanna Niemi, , Iain Ramsay and William C. Whitford (Eds.), Consumer Credit, Debt and Bankruptcy. Comparative and international perspectives, Hart Publishing 2009, p. 419 -440

N.J.H. Huls & H.D. Stout (red.) , Reflecties op reflexief recht, Zwolle: W.E.J. Tjeenk Willink 1992

Nadja Jungmann, De WSNP: Bedoelde en onbedoelde effecten op het minnelijk traject (diss. Leiden), Leiden: Leiden University Press 2006

Nadja Jungmann et all, Schulden? De gemeente helpt!, Utrecht, Hiemstra & De Vries 2008

N. Jungmann, Wettelijke zorgplicht voor gemeenten, Kabinet werkt aan effectievere schuldhulpverlening. in: Wmo magazine, nr. 6, 2008, pp 16-20

N. Jungmann & H.D.L.M Schruer, Zorgplicht, grotere effectiviteit schuldhulpverlening. in: Sociaal Bestek, nr. 2, 2009, pp 26-31

LOSR, Incassokosten een bron van ergernis, MOgroep, 2008

A. Ogus, Regulation: Legal Form and Economic Theory, Oxford: Oxford University Press 1994

A.I. Ogus, “Rethinking self-regulation”, Oxford Journal of Legal Studies, vol. 15, 1995, 97-108

Mancur Olson, The rise and decline of nations, Yale University Press 1982

Suzan Stoter en Nick Huls, Onderhandelend wetgeven. Een kwestie van geven en nemen. Sdu, Uitgevers, den Haag 2003

Suzan Stoter en Nick Huls, Regeldruk. Een blinde vlek van onderhandelend wetgeven, Boom juridische uitgevers, Den Haag 2006

W.C.A.M. Dessart, A.A.A. Kuylen, T. De Vries, Ja, nee, geen lening, Stichting Wetenschappelijk Onderzoek Consumentenaangelegenheden (SWOKA) onderzoekrapport no. 17, delen 1 en 2, ‘s-Gravenhage 1982

Bert de Vroom, Verenigde fabrikanten. Ondernemersverenigingen van de voedings- en de geneesmiddelenindustrie, diss Leiden 1990

Frans van Waarden, Organisatiemacht van belangenverenigingen. De ondernemersorganisaties in de bouwnijverheid als voorbeeld, diss. Leiden 1989

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H. Weyers & J. Stamhuis (red), ‘Themanummer zelfregulering’, Recht der Werkelijkheid, 2003


[1] Baarsma et al. 2003, p. 13.

[2] Giesen 2007, p. 13.

[3] Griffiths and Weyers 2005, passim.

[4] Baarsma et al. 2003, p. 15.

[5] Baarsma et al. 2003, p. 14.

[6] Baarsma et al. 2004, p. 86-87.

[7] Ogus 1995, p. 98.

[8] Weyers and Stamhuis 2003.

[9] Huls 1998, Stoter and Huls 2003 and 2006.

[10] Van Driel 1989, p. 9.

[11] Campbell 1999, p. 719 et seq.

[12] This is further elaborated in Ogus 1995, p. 102-107.

[13] Huls 1987.

[14] Jungmann 2006.

[15] Huls 1992.

[16] Explanatory memorandum to the WSNP, Parliamentary documents II, 1992/93, 22 969, no. 3.

[17] Jungmann 2006.

[18] Jungmann, Niemeijer and Ter Voert 2001.

[19] Parliamentary documents II, 2004/05, 29 942, no. 3 (Legislative proposal for amendments to the WSNP).

[20] Parliamentary documents II, 2004/05, 24 515, no. 64 (Motion on certification in voluntary debt settlement).

[21] It must be noted here that initially about twenty stakeholder parties were identified and that they started developing the standards as a group. It quickly became clear that the 200,000 euros in subsidy from the Ministry of Social Affairs and Employment was not enough and the parties involved would have to finance an extra 50,000 euros. The parties that were not willing to contribute were subsequently no longer welcome at the table. This led to the curious result that a number of important parties were no longer at the table and a number of small players did in fact cooperate in developing the standards up to the very end.

[22] Jungmann & Schruer 2009, p. 29.

[23] Parliamentary documents II, 2007/08, 24 515, no. 124.

[24] Jungmann et al. 2008.

[25] Jungmann 2008.

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