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Dr Joseph Spooner

This course is available on the Executive Master of Laws (ELLM). This course is not available as an outside option.

As the past decade has transformed understandings of finance and the economy, it has generated increasingly widespread recognition of the economic centrality of household finance. The Covid-19 crisis laid bare how households and the wider economy have come to depend on credit markets to make ends meet and keep economic activity flowing, and measures addressing problems of credit and debt in household and SME markets were central to policy responses to the pandemic. Responsibility for both the Global Financial Crisis of the late 2000s and subsequent Great Recession can be attributed to failures of household credit markets. Consumer expenditure accounts for over 50% of GDP in most OECD economies, meaning that the financial markets and products powering this spending are of central policy importance. Key contemporary problems of economic stagnation, inequality, and political instability can all in some ways be linked to problems arising in consumer financial markets, which are increasingly important sites of legal and political activity. The economic significance of SME finance is similarly clear. Small and Medium Enterprises (SMEs) account for 99% of firms and approximately 70% of jobs in OECD countries, and questions of how these firms access finance raise perennial policy concerns. Alongside the economic rethinking necessitated by the pandemic, the political and regulatory disruption of Brexit also makes this is a key time for the study of banking and finance law as it relates to consumers and SMEs.

The significance and expansive reach of the consumer and SME dimensions of financial law are not matched by coverage in typical law school curricula – this course aims to address this imbalance by presenting a unique offering. The course begins by discussing key principles and theoretical ideas of retail financial market regulation. It considers the nature and structure of consumer and SME financial markets, examining the institutions and sources that create the ground rules of markets, involving questions of how financial laws and regulations in these markets are made, applied, and enforced. The course applies and tests these ideas in examining discrete markets and areas of law, drawing on a combination of international norms and detailed examples from European, North American and English law. The course is structured uniquely around a thematic approach, discussing legal material through key questions of consumer/SME financial law and policy. Themes include:

• The place(s) of consumers and small enterprises in the Real Economy
• Aims and justifications of regulation in consumer and SME financial markets
• Consumers, SMEs and financial stability (including prudential regulation and its interaction with consumer/SME protection)
• Access to finance (basic banking; the cashless society; fintech)
• Complexity in financial products (including product design and the regulation of contract terms; information asymmetry and disclosure regulations; behavioural perspectives and ‘nudging’)
• Mis-selling scandals and legal responses (including mortgage lending crises and ‘responsible lending’; SME derivatives mis-selling and investor protection rules)
• Cross subsidisation, price discrimination, and fairness in financial services pricing (‘the poor pay more’; the ‘loyalty penalty’)
• The problem of high-cost credit and usury regulation (the Wonga saga and payday loan regulation; bank overdrafts; the role of price regulation in financial markets)
• Wall Street v Main Street (dispute resolution and enforcement; financial law-making)
• Financial failure and default (entrepreneurship and bankruptcy law; over-indebtedness and consumer bankruptcy)

This is an intensive module, which will be delivered through interactive seminars. The module will provide between 24 and 26 hours of contact teaching time. Students will be provided with online and hard copy materials for the module well in advance of the intensive teaching. The teaching will take place in week-long sessions, running from Monday to Friday.

Students will be expected to produce 1 essay in the MT.

Formative assessments are set by teachers during the course and students will be given a submission date of approximately one month from the end of the teaching session. Feedback will be provided within two weeks following submission, either on Moodle or via email. The word limit for formative essays is 2000 words.

General:

• Sir Ross Cranston, Emilios Avgouleas, Kristin van Zwieten, Christopher Hare, and Theodor van Sante, Principles of Banking Law (3rd edition, OUP 2018)

AND

• Geraint Howells, Iain Ramsay, and Thomas Wilhelmsson (eds.), Handbook of Research on International Consumer Law, (2 edition, Elgar 2018)

OR

• Geraint Howells, Christian Twigg-Flesner and Thomas Wilhelmsson, Rethinking EU Consumer Law (1 edition, Routledge 2017).

Why Regulate of Consumer and SME Financial Markets?

• Iain Ramsay, ‘Consumer Credit Law, Distributive Justice and the Welfare State’ (1995) 15 Oxford Journal of Legal Studies 177.
• George A. Akerlof, The Market for ‘Lemons’, 84 The Quarterly Journal of Economics 488 (1970)
• David Caplovitz, Poor Pay More: Consumer Practices of Low-Income Families (Free Press 1968).
• Luigi Zingales, ‘Does Finance Benefit Society?’ (2015) 70 The Journal of Finance 1327.
• Financial Conduct Authority, ‘Fair Pricing in Financial Services’ (FCA 2018) Discussion Paper DP18/9

Complexity in Financial Products: Contract-as-Product

• Oren Bar-Gill, Seduction by Contract: Law, Economics, and Psychology in Consumer Markets (OUP Oxford 2012), Chapter 1.
• Margaret Jane Radin, Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law (Princeton University Press 2012), Chapters 1-4.

Consumers, SMEs, and Financial Stability: Prudential Perspectives

• Anat Admati and Martin Hellwig, The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It (Updated edition, Princeton University Press 2014).
• Atif Mian and Amir Sufi, House of Debt (University of Chicago Press 2014).
• Kathleen C Engel and Patricia A McCoy, The Subprime Virus: Reckless Credit, Regulatory Failure, and Next Steps (OUP USA 2011)

Sample Reading:

• Sir Ross Cranston, Emilios Avgouleas, Kristin van Zwieten, Christopher Hare, and Theodor van Sante, Principles of Banking Law (3rd edition, OUP 2018)
• Geraint Howells, Iain Ramsay, and Thomas Wilhelmsson (eds.), Handbook of Research on International Consumer Law, (2 edition, Elgar 2018)
• Anat Admati and Martin Hellwig, The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It (Updated edition, Princeton University Press 2014).
• Atif Mian and Amir Sufi, House of Debt (University of Chicago Press 2014).
• Kathleen C Engel and Patricia A McCoy, The Subprime Virus: Reckless Credit, Regulatory Failure, and Next Steps (OUP USA 2011)
• Iain Ramsay, ‘Consumer Credit Law, Distributive Justice and the Welfare State’ (1995) 15 Oxford Journal of Legal Studies 177.
• Luigi Zingales, ‘Does Finance Benefit Society?’ (2015) 70 The Journal of Finance 1327.
• Financial Conduct Authority, ‘Fair Pricing in Financial Services’ (FCA 2018) Discussion Paper DP18/9

Assessment path 1
Take-home assessment (100%).

Assessment path 2
Essay (100%, 8000 words).

Students will be examined through a combination of an (8,000 word) assessed long essay (which may take the form of a policy paper) or take-home examination (6,000 words). The take-home examination will be uploaded and submitted electronically, and will be set two months after the completion of the intensive teaching. Video revision/question-and-answer sessions will be offered to students between the end of the teaching session and the exam.