Pathways to Financial Inclusion Campaign Launched
The National Housing Federation and Debt on Our Doorstep have launched the Pathways to Financial Inclusion Campaign. The Campaign urges the Government to cap the extortionate interest rates charged by doorstep lenders, who will be preying on housing association tenants and other low income households this Christmas.
The Housing Corporation, the government funding body for housing associations, has recently announced that it will support efforts to provide realistic alternatives to home credit companies and their sky-high APR fees, which average around 177%.
But the National Housing Federation says action is needed to stop these companies from exploiting people on low incomes in the first place. The Federation, representing housing associations, has joined with Debt on Our Doorstep to demand a ceiling on interest rates.
The Campaign also seeks to ensure that every UK citizen is given the right to a basic bank account that is accessible and meets their needs; and home credit companies are forced to pass on their customers' repayment records to credit reference agencies.
We have written to Trade and Industry Secretary Alan Johnson to urge the Government to adopt our recommendations and we are calling on MPs to back the campaign this Christmas by signing a new Early Day Motion , tabled by Andrew Dismore MP. 28 M.P's have already signed. Please write to yours asking them to sign up.
David Orr, chief executive of the National Housing Federation, said: 'We know from many of our own tenants that low income households are being targeted and ripped off by doorstep lenders, paying way over the top for credit. They are being hit hard in the run up to Christmas when it's especially difficult to make ends meet.'
'Housing associations are working hard to provide a realistic alternative and we welcome this support from the Housing Corporation. But the Government needs to go further if it is really serious about financial inclusion.'
'It's time to cap the ridiculous interest rates set by home credit companies and doorstep lenders.'
Niall Cooper, vice-chair of Debt on our Doorstep, said: "Although there is now widespread awareness of the harmful effects of extortionate and predatory lending in poor communities, the Government's response to date has been woefully inadequate.
"Unless it is substantially strengthened, the Consumer Credit Bill currently going through Parliament will fail to provide vulnerable consumers with the protection they desperately need."
Almost two million people on low incomes are denied access to basic financial services. They are often driven to exploitative doorstep lenders charging crippling interest rates.
In the run up to Christmas these companies will be targeting low income households, particularly the tenants of housing associations and councils.
Borrowers are encouraged to take out top-up loans as they struggle to make repayments. What begins as a £100 loan to pay for Christmas presents can escalate into a debt of thousands within months.
Banks have been criticised for failing to promote basic bank accounts, which provide a facility for wages and benefits to be paid in but no overdraft. In some cases, banks have even discouraged customers from opening them.
Under a pilot scheme currently being run by one major bank/building society, bank customers in some parts of London are no longer able to access services at the counter, and are restricted to doing their banking using cash points, the telephone or the internet.
Because of the way that many banks interpret proof-of-identity requirements, many low income customers are unable to open a basic bank account.For existing customers, there is difficulty in accessing face-to-face banking services as the banks are retreating from the most deprived areas.
Last year, 40% of the branch closures by one high street bank were in deprived wards.Half of these were the last bank in the community, meaning that residents were cut off from mainstream banking services.
