Current Developments in Consumer Lending

Guidelines for Case study analysis Report

How to address the assignment requirements:

The student will be required to:

1. Review the current literature on consumer lending with emphasis on currentdevelopments.
2. Identify relevant issues relating to consumer lending bybanks.

You should read at least two research papers on each issue, analyse their findings and summarise their results of these research after critical analysis of each paper.Every one is required to discuss at least five of the nine issues mentioned below.

Some of the issues identified in the literature are:

1. Legal issues in consumer lending.

What are the laws and regulation in place for consumer lending and how these laws ensure that consumers are treated fairly in the market

Cite some laws, discuss their implications on the business of consumer lending by banks. Discuss some recent developments, particularly those relating to coronavirus.

1. Market for consumer lending – Demand, supply, availability of credit.

How the consumer lending market has been affected by changes in employment, economic factors such as migration, changes in peoples perception and attitudes.

1. Current trends in consumer lending- in Australia or world wide- look at some of the data available with regulatory agencies like RBA and analyse the trends, up and down of consumer lending of consumer lending business. Examine the reasons for these changes.

1. Pricing – Interest rates, fees, penalties.

How banks and service providers set interest rates and fees on various types of consumer loans. What are the reasons for charging penalties from the customers particularly for non repayment or default.

1. Responsible lending – What is responsible lending. How banks and regulators have set up the responsible lending and fair trading. Find evidence of compliance or non-compliance of these guidelines by the banks, examine the reasons for bank behaviour and resulting consequences for banks and customers

1. Discuss the development of various products in consumer lending such as different credit cards, motor vehicle loans, home loans, personal loans or any other type of loans. How banks differentiate their products from each other and meet the competition. Discuss the innovation of new products.

1. How consumer credit loan applications are analysed by banks. Discuss different types of Credit scoring models used. Development issues in these models. What are the assumption and effectiveness of these models.

1. Frauds in consumer lending.

Many consumer lending providers including banks have perpetrated frauds on customers in the area of consumer lending. Discuss some of these frauds, the reasons behind these frauds and how these frauds were handled by regulators or courts.

1. New forms of lending.

In the recent past some of the new avenues of consumer lending have been developed like fringe lending from cash converter, check loans, crowd funding etc.  As a result, loan sharks have been able to target customers. Describe some of these new developments, their effect on customers and consumer lending

3. Select one bank as your case bank and relate the issues identified through the literature review to the consumer lending business of thebank (A) selected by you. Critically analyse the consumer lending products and services of the bank in the area of consumer lending in terms of theliterature.
4. Compare and analyse the terms and condition of consumer lending products of your bank with the consumer lending products of anotherbank (B) on at least four products. This comparison should be done across four products of each bank. The comparison can be provided in the table form as under.

6. Draw appropriate conclusions from the comparison in regard to delivery of consumer credit product of each bank in terms of the literature and in and provide recommendations based onthe your analysis.

Requirements for the report

Length:  3000 words 

Format: Typed using 1½ or double line spacing with a 2.5cms margin on all sides.

Requirements:  The report  should include an executive summary and a list of references using  Harvard citation   

Assessment Criteria/Marking Guidelines

The assessment of the essay will be based on the following:

 Executive Summary                                                                         (2 Marks)

• Overview of the whole report in 150-200 words

Structure and Presentation                                                              (2 Marks)      

• Structure of the report
• Cohesion between paragraphs
• Adherence to formatting guidelines

Contents and arguments presented critically on various issues

• Demonstrable critical analysis and evaluation of the literature reviews
• Comparison of products and services of the banks A and B on consumer lending
• How each issue is addressed, discussed and analysed.
• Logical and coherent conclusions drawn from comparison between banks A and B relating to the literature and                                                      (22  Marks)

Writing Style                                                                                      (2 Marks)

• Clear & concise language
• No grammatical mistakes

References and Citations                                                                  (2 Marks)

• Reference List (Harvard)

A minimum of 10-12 references required in all. References on different issues should be provided as mentioned above. References should be from academic literature such as journal articles or evidence based articles.