17th Session of the Congress of Local and Regional Authorities of the Council of Europe

Patrizia Muratore: “A regional legislation is needed to prevent over-indebtedness”

Congress adopted a resolution and a recommandation, on 14 October, focusing the responsibility of regions in the solution and prevention of over-indebtedness of households. The rapporteur Patrizia Muratore (Italy, SOC) explains in this interview through the experience of her region this growing phenomenon and the Congress proposals to face it.

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Interview, 14 October 2009

Disregarding the impact of the recent crisis, over-indebtedness has become increasingly widespread in the last decade. In your opinion, where does the prime responsibility for this phenomenon lie?

The explanation for this phenomenon is principally social in nature: runaway consumerism has led to debt, which usury can worsen, especially when access to legal credit becomes more difficult. The current economic crisis, and the reduction in the purchasing power of salaries and pensions, has simply accentuated this already existing phenomenon. The economists have made it clear that the crisis was a result of the authorities' loss of control over the financial system.

The local bodies that are on the front line in dealing with this situation need appropriate instruments and resources. That is why in my report I make specific reference to the need for regional legislation guaranteeing the resources necessary to prevent over-indebtedness and support those concerned. In my region, Liguria, I have myself proposed a bill providing that the regional authority shall supplement the advance paid by the National Anti-Usury Fund, which is only 50%. The region should also allocate resources to the mutual guarantee funds, local bodies and recognised foundations that come to the assistance of victims of debt. This legislation is intended to complement a national law on economic support measures for the associations and foundations that combat usury, the enactment of which is however presently suspended.

The Council of Europe has developed a new approach to dealing with over-indebtedness, the Multipartite Social Contract, which is based on the principle of a partnership among a number of stakeholders, including victims themselves. In what way is this an effective approach?

When over-indebtedness is compounded by usury, the victims' problem is disclosing their situation. For fear of being threatened they prefer to remain anonymous, and  there is considerable reluctance to refer such cases to the authorities. In Liguria this problem is particularly marked, and the work being done by the associations active in this field has proved essential. As a result, over the last three years, a good hundred cases of usury have been reported to the associations, compared with only seven complaints lodged with the public prosecutor. The Congress's resolution and recommendation accordingly address the various players concerned - public bodies, voluntary organisations, credit institutions and businesses, among others - who must work very closely together and on an equal footing with debt victims themselves.

In your report you propose that regions adopt measures to prevent over-indebtedness. Can you give us a few examples of good practice in such matters?

Prevention is possible where the nature of the problem is known. For this reason we have proposed the creation of a regional observatory on usury and access to credit so as to monitor the situation. Prevention must also start from the most practical aspects of everyday life. Consumerism has caused people to lose sight of essential means of managing their money in a rational way. In this connection, in United Kingdom schools pupils are taught how to shop so as to avoid making useless purchases. On the subject of prevention, I would add that there is a need for credit institutions to be willing to co-operate in such initiatives and to become involved in a broader process to analyse the causes of over-indebtedness.