Routledge Research in Finance and Banking Law DISCRIMINATION, VULNERABLE CONSUMERS AND FINANCIAL INCLUSION FAIR ACCESS TO FINANCIAL SERVICES AND THE LAW Edited by Ca˘ta˘lin-Gabriel Sta˘nescu and Asress Adimi Gikay Discrimination, Vulnerable Consumers and Financial Inclusion This book addresses the questions of discrimination, vulnerable consumers, and financial inclusion in light of the emerging legal, socioeconomic, and technological challenges. New technologies – such as artificial intelligence- driven consumer credit risk assessment and Fintech platforms, the changing nature of vulnerability due to the ongoing COVID-19 pandemic, as well as the sophistication of digital technologies, which help circumvent legal barriers and protections – necessitate the continuous study of the existing legal frameworks and measures that are capable of tackling these challenges. Organized in two major parts, the first addresses, from multiple national angles, the idea of a human rights approach to consumer law, in order to replace the mantra of economic efficiency that characterizes financial services with those of human dignity and freedom from discrimination and from debt-induced servitude. The second tackles the challenges posed by increased usage of technology in connection with financial services, which tends to solve, but also creates, additional issues for consumers in general, and for vulnerable groups in particular. Cătălin-Gabriel Stănescu is Assistant Professor at the Centre for Market and Economic Law, University of Copenhagen. Asress Adimi Gikay is Lecturer at Brunel University London with his research focusing on Artificial Intelligence, Law and Ethics. Routledge Research in Finance and Banking Law Housing and financial stability Mortgage Lending and Macroprudential Policy in the US and UK Alan Howard Brener Conceptualizing the Regulatory Thicket China’s Financial Markets After the Global Financial Crisis Shen Wei Banking Bailout Law A comparative study of the United States, United Kingdom, and the European Union Virag Blazsek Public-Private Partnerships in Emerging Economies Augustine Edobor Arimoro International Investment Protection within Europe The EU’s Assertion of Control Julien Berger Regulation and the Global Financial Crisis Impact, Regulatory Responses, and Beyond Daniel Cash and Robert Goddard Discrimination, Vulnerable Consumers and Financial Inclusion Fair Access to Financial Services and the Law Edited by Cătălin-Gabriel Stănescu and Asress Adimi Gikay For more information about this series, please visit: www.routledge.com/Routledge- Research-in-Finance-and-Banking-Law/book-series/FINANCIALLAW. Discrimination, Vulnerable Consumers and Financial Inclusion Fair Access to Financial Services and the Law Edited by Cătălin-Gabriel Stănescu and Asress Adimi Gikay First published 2021 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 52 Vanderbilt Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2021 selection and editorial matter, Cătălin-Gabriel Stănescu and Asress Adimi Gikay; individual chapters, the contributors The right of Cătălin-Gabriel Stănescu and Asress Adimi Gikay to be identified as the authors of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Names: Stanescu, Catalin-Gabriel, 1980- editor. | Gikay, Asress Adimi, 1984- editor. Title: Discrimination, vulnerable consumers, and financial inclusion: fair access to financial services and the law / edited by Cat̆al̆in Gabriel Stan̆ escu and Asress Adimi Gikay. Description: Milton Park, Abingdon, Oxon; New York, NY: Routledge, 2021. | Includes bibliographical references and index. Identifiers: LCCN 2020032994 (print) | LCCN 2020032995 (ebook) | ISBN 9780367511111 (hardback) | ISBN 9781003055075 (ebook) Subjects: LCSH: Discrimination—Law and legislation. | Consumer protection—Law and legislation. | Credit—Law and legislation. | Financial services—Law and legislation. | Consumption (Economics)—Social aspects. | Low-income consumers. | Legal assistance to the poor. Classification: LCC K3242.D575 2021 (print) | LCC K3242 (ebook) | DDC 343.07/25—dc23 LC record available at lccn.loc.gov/2020032994 LC ebook record available at lccn.loc.gov/2020032995 ISBN: 978-0-367-51111-1 (hbk) ISBN: 978-1-003-05507-5 (ebk) Typeset in Galliard by MPS Limited, Dehradun Contents Acknowledgments vii List of contributors viii Introduction: discrimination, vulnerable consumers and financial inclusion (Stănescu and Gikay) 1 PART I 23 1 Tackling issues in consumer credit: the role of human rights (Ondersma) 25 2 Beyond negative interpretations of freedom of contract: the interplay between private law and human rights in light of the UN convention on the rights of persons with disabilities (Varney) 35 3 Anti-discrimination efforts for insurance consumers: legislation and practice in Mainland China (Kailiang) 57 4 Vulnerability, financial inclusion, and the heightened relevance of education in a credit crisis (Iheme) 80 5 The payments revolution: toward financial exclusion or inclusion? (Rochemont) 111 PART II 139 6 Inside the black box: the impact of machine learning on the creditworthiness assessment (Atkinson) 141 vi Contents 7 Consumer peer-to-peer lending and the promise of enhancing access to credit: lessons from the Netherlands (Buit) 166 8 Digital debt collection: opportunities, abuses and concerns (Stănescu) 185 9 Financial conduct in the UK’s banking sector: regulating to protect vulnerable consumers (Powley and Stanton) 206 10 Are some classes of consumer-investors of collapsed pyramid and Ponzi schemes vulnerable? A multi- jurisdictional perspective (Tajti) 236 Index 289 Acknowledgments This book is the outcome of an international conference entitled “Fair and Non-Discriminatory Access to Financial Services” that took place at the Faculty of Law, University of Copenhagen, Denmark, in September 2019. The aim of the conference was to analyze recent trends and challenges posed by technological advancements and discriminatory practices against vulnerable consumer groups in accessing financial services in a number of international jurisdictions. We would like to thank all those who answered the call and actively participated in the two days of presentations and discussions in Copenhagen and made both the event and this book possible. Our appreciation goes to the Carlsberg Foundation and the Dreyer Fund for their generous financial support, their commitment to high-quality academic research, and their flexibility and responsiveness. Without them, it would have been impossible to organize the conference, bring together the participants from all around the world, record all presentations, interview all participants, and make them available for the wider public. We express our gratitude to Professor Caroline Heide-Jørgensen, Head of the Center for Market and Economic Law (Faculty of Law University of Copenhagen) and Professor Henrik Palmer Olsen, Associate Dean for Research (Faculty of Law, University of Copenhagen) for their steady support and for endorsing, promoting, and hosting the conference. Credit is also due to the amazing staff at the University of Copenhagen, who helped finance, organize, and run the conference: Malene Vinberg Johansen, Cecilie Petersen, Michelle Goncalves Kjærulff, and Sharon O’Carroll Khan. Last, but not least, a special acknowledgment goes to Siobhan Poole and Chloe James, from Routledge, for their support and assistance in turning this book into a reality. We hope the book will prove interesting and that it will facilitate the exchange of ideas and understanding, foster meaningful discussions, and lead to inspired solutions for the benefit of all vulnerable consumers. Contributors Cătălin-Gabriel Stănescu is Assistant Professor at the Centre for Market and Economic Law, University of Copenhagen. Cătălin became a member of the National Union of Romanian Bar Associations in 2006 and worked both in private practice and as in-house counsel for two major multinational corporations. In 2015, he obtained a doctorate (summa cum laude) in International Business Law (Central European University) with a thesis entitled “Self-Help, Private Debt Collection and the Concomitant Risks – A Comparative Analysis” (Springer, 2015). Since 2016, he joined the Faculty of Law, University of Copenhagen, teaching and researching in commercial and consumer law. Cătălin obtained a Marie Curie Individual Fellowship in 2018 and is currently conducting his research project on the need to harmonize regulation concerning abusive debt collection practices in the European Union. His other research interests concern consumer finance, digitization of financial services, fair and nondiscriminatory access to credit, consumer vulnerability, and economic inequality. Dr. Asress Adimi Gikay is Lecturer at Brunel University London with his research focusing on Artificial Intelligence, Law and Ethics. In 2020, he completed his PhD (with Honor) in Individual Person and Legal Protections at Sant’Anna School of Advanced Studies (Pisa, Italy) with a thesis on the Regulation of Automated Consumer Credit Scoring in the EU and the US. He also earned a Doctorate Degree in Juridical Sciences (summa cum laude) at Central European University (CEU) in 2016 specializing in comparative secured transactions law. He holds an LLM in International Business Law (CEU) and an LLM in Comparative Law, Economic and Finance (IUC- Torino). He obtained his LLB with distinction from Addis Ababa University Faculty of Law in 2008. Dr. Asress Adimi Gikay has published several articles in peer-reviewed journals on topics ranging from secured transaction law reform to the regulation of blockchain and cryptocurrencies including in the Journal of Civil Law Studies, Case Western Reserve Journal of Law, Technology & the Internet, Tilburg Law Review, and Mizan Law Review. He has also authored monographs published Contributors ix on the International Encyclopedia of Laws and a book titled Competition Law in Ethiopia published by Kluwer Law International. Joanne Atkinson is Principal Lecturer in Law at the University of Portsmouth. Joanne qualified as a solicitor in England and Wales in 1999 and spent time working both in private practice and in-house for a global financial services corporation. She joined the University of Portsmouth in 2011, teaching corporate and commercial law in a variety of undergraduate and postgraduate courses. Joanne is the University’s LLM course director and uses her experience in legal practice to enhance and enliven students’ experience. Her research interests focus on consumer credit regulation and fair access to credit. Since 2019, Joanne has been a contributing editor of Goode’s Consumer Credit Law and Practice. Martha Buit holds an LLM (cum laude) in Legal Research with a focus on private law from the University of Groningen and is currently a PhD researcher at the Groningen Centre for European Financial Services Law. Her research concerns lending-based crowdfunding and how this alternative financing structure can be adequately regulated. In particular, the project focuses on achieving a balance between the protection of consumers and small and medium-sized enterprises and enabling the further innovation and growth of LB-crowdfunding. Williams C. Iheme obtained his doctor of juridical science degree (SJD) in 2016 from Central European University, and his book titled Towards Reforming the Legal Framework for Secured Transactions in Nigeria (Springer, 2016) heralded a major law reform in Nigeria’s secured transactions law in 2017. He was Visiting Research Scholar at the Cornell Law School in 2015. He is currently Associate Professor at the Jindal Global Law School and recurrent Visiting Professor at the Strathmore Law School. Before joining academia full time, he was practicing law for some years at top commercial law firms in Lagos where clients consulted him for his authoritative advice on contracts, corporate insolvency, secured transactions, etc. Apart from consumer protection law, his other research interests include corporate governance, insolvency, arbitration, international trade, and secured transactions. MA Kailiang is a law PhD candidate sponsored by China Scholarship Council at the University of Paris-Sud/University of Paris-Saclay and Visiting Scholar in the Law School at the University of Copenhagen. He graduated from China University of Political Science and Law with a master’s degree in Economic Law. His PhD dissertation focused on researching shareholder protection regimes in financial holding companies. He has published several papers on Internet finance regulation and reform of state-owned enterprises both in Chinese and English. Also, he participated in research programs supported by the National Social Science Fund of China and China University of Political Science and Law. Moreover, he has participated in several international conferences where he served as a speaker and contributed papers. He currently