There were more bankruptcies in 2005 compared with the year before. Non-performing loans for consumer credit like housing, cars and credit cards, have risen in the past five years. With rising consumer credit issues, should regulators ask banks to rein in consumer credit?

Lending and borrowing activities are as old as society. On one hand, if access to credit is a basic right, can you deny it? Because setting a threshold means denying credit to someone. On the contrary, when there is an easy credit, more people will land themselves in trouble.

If loose credit is being blamed for debt problems, setting higher thresholds for access, especially to credit cards, has been suggested. The number of bankruptcies due to credit cards is still relatively small, but of concern is the proportion belonging to youths. They are most vulnerable, as they tend to spend and worry about the pain later. Thus, a higher salary limit should be imposed.

Moreover, even a single person who is earning a reasonable basic salary a month will find it hard to make ends meet because the cost of living in urban areas has gone up significantly. How can he meet the repayment on a credit card? With all this emphasis on credit, savings have been left out of the equation.

However, higher income requirements alone won't solve the problem of poor credit management. People who borrow irresponsibly should be denied credit, but what is the best way to determine responsible or irresponsible borrowing? It has nothing to do with income.

There is a suggestion of increasing in the minimum credit card payments. If you borrow $1,000 and pay 5%, it will take you 20 months to pay it off. If you pay 15% every month, it can be paid off in six months. There is also a suggestion of setting up a debt-counseling agency by the government to provide consumers with financial counseling and to negotiate with lenders on behalf of debtors.

Raising the bar so that only worthy individuals get credit is one thing while wise management of credit once it is obtained is another matter.

Competition among banks serves to improve loan product features for consumers, resulting in benefits like annual fee waivers for credit cards, lower interest rates for balance transfers and 0% interest installment schemes. However, does competitiveness encourage bad debt?

Although there are consumer education programs and credit card statements carry an educational message about how much interest can accumulate if you pay less than the full amount, enclosed with that statement are leaflets giving incentives for consumers to carry balances on their cards. Signals are often inconsistent for the consumer.

There should be some form of ethical marketing regulations but who is going to enforce them? Advertising control always poses challenges because of the argument for freedom of speech and the right to know. However, the regulator can play a more proactive role. There are now new advertising techniques to appeal to the individual's emotions. There should be some form of restraint in advertising, whether achieved by the regulator, self-regulation or co-regulation in some form.

We can't blame the banks for marketing their products. So, the ball is back in the consumer's court; they have to educate themselves. It's the banks' right to market and to make money, but it's the consumers' responsibility to educate themselves.

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