National Credit Mediator
“When it comes to financing, don’t be dramatic, but anticipate problems”
Can you tell us about the work of a credit ombudsman?
The system has been in place for a little over three years, and it allows us to have a more pertinent perspective. First off, some statistics: 34,000 complaints have been made, and while the data for 18% of cases was inadmissible, more than 15,000 mediations had a favourable outcome, which means a success rate of 62% of the cases that were dealt with and corresponds to 270,000 jobs stabilised, and in some cases, saved. That’s an excellent result, especially if you take into account the material and legal requirements of mediation. The banking community has, of course, agreed to play the game and has set about it by means of a convention – which provides a status quo of banking relations throughout the review of the report – but apart from that, mediation uses only the power of conviction. The question is sometimes whether the principle of credit mediation should be made permanent: without prejudging political decisions, I would say that in the current economic climate, the system proves its practicality.
What are the businesses involved? What have been the notable changes since the introduction of the mediation service?
Even though at the start complaints could be made by companies of a certain size, it’s essentially about small to medium-sized businesses: around half the requests come from businesses whose credit does not exceed €50,000. There are a couple of hundred files for companies with over a hundred employees, and those are mostly dealt with in Paris, and the files for companies with over a thousand employees are the exception. On the whole it is a fair representation of the economic make-up of France, even if, according to the cyclical trough, certain industries which are sensitive to the economic climate such as transport, communication, IT services, and building and civil engineering may be a little under-represented. Over time, the general tendency is a gradual decrease in the number of new cases, with, however, some surprises linked to the health of the banking industry. We have noticed a slight change in this basic trend since the end of 2011, but it was nothing compared to when we began the mediation service: the current rate is around 450 cases a month. The low point was at the start of last summer, around 300 cases.
What does this system involve?
Credit mediation involves a national team, which can adapt easily and quickly depending on the task, and whose work is relayed to each department by teams from the Banque de France, the French central bank, under the authority of the heads of the department. The fact that we can depend on this huge network has two advantages: it allows us to deal with a large number of cases, and to deal with them in the most appropriate way possible because of the proximity of the Banque de France teams to local agents. On the whole it means an efficient system which is a good support when economic conditions and credit distribution are poor.
You recently co-signed a report on the financing of small and medium-sized businesses: what were the main lessons you learned from that?
The first was to do with equity capital. The current situation is certainly better than we generally make it out to be; if we base it on the weight of equity capital on their balance sheets, French businesses are doing reasonably well in relation to Europe as a whole, and above all, this ratio has grown at a sensible rate over the last decade. But the current trends are worrying. High-risk saving is often preferred to safer investments, helped by taxes; prudential rules which are imposed on banks and insurance companies have become unfavourable to stock ownership. As for credit this time, the report is the same: it’s gone well up until now –for example, since the start of the economic crisis, credit has been more abundant and less expensive in France than elsewhere in Europe. But will this situation last? One must question, among other things, the dominance of banking credit in an environment where maintaining long-term credit will be costly for banks’ equity capital.