Consumer Debt Prevention and Discharge in the Arabian Gulf
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Consumer Debt Prevention and Discharge in the Arabian Gulf D. Burton 1 Received: 7 April 2020 / Accepted: 9 September 2020/ # Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract
This article analyses the relationship between Islam and consumer policy in the domain of consumer credit and over-indebtedness in six countries in the Arabian Gulf. The findings indicate that Islamic societies are distinct policymaking environments and share similarities in the development of consumer credit and policies relating to debt prevention and debt discharge. However, several differences are also observable that reflect complex variations in the social, political, historical, and economic trajectories of each country. A dilemma for policymakers is how to reconcile greater levels of consumer credit and overindebtedness with the requirements of Islam. Policy responses have been a mix of legislative change and soft law. The UAE is the only country that has introduced an insolvency law for natural persons. Discriminating between the citizens and expatriates is a feature of consumer policy in all countries. Keywords Consumer credit . Over-indebtedness . Insolvency . Islam . Sharia Governments encourage, discourage, and prohibit certain acts or behaviours by choosing specific policy interventions, and socio-political structures determine how policies are formulated, implemented, and legitimated (Skeel 2003). Many countries are experiencing higher levels of consumer credit and over-indebtedness (Linna 2015; Majamaa et al. 2019), but how policymakers address these issues are subject to wide national and regional variations. The 2007–2008 financial crisis and its roots in consumer credit has resulted in credit and overindebtedness being placed higher up the policy agenda (Burton 2007, 2019, 2020; Ramsay and Williams 2020). G20/OECD (OECD 2011, p. 4) High Level Principles on Consumer Financial Protection advocate greater legal recognition of financial consumer protection, the development of oversight bodies with the necessary authority and resources to protect consumers, more emphasis on responsible business conduct within financial institutions, and adequate complaints handling and redress mechanisms. Related concerns include consumer access to
* D. Burton
1
Leyburn, UK
D. Burton
insolvency procedures and the introduction of more liberal consumer insolvency laws (Niemi et al. 2009; World Bank 2017). Moreover, debt relief has emerged as a human rights issue (Ondersma 2015). The speed of adoption of legal reforms and how they are framed is dependent on the unique historical, economic, social, political, and cultural characteristics of each country and the willingness of policymakers and legislators to borrow and adapt practices from other nations (Alleweldt et al. 2013; World Bank 2017). The process through which consumer policy is formulated in democratic Western societies through elections, debate, political process, political discourse, and the activities of interest groups (Ramsay 2003, 2017) is quite diff
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