The Carnegie UK Trust has just launched a new £1 million fund to help tackle the poverty premium for low income borrowers in Scotland.
Loans from high cost credit companies, including pay day loan firms and door step lenders, currently cost people in Scotland millions of pounds in interest repayments every year – and people with the least usually pay the most for their credit.
Responsible Finance welcomes the establishment of the new Affordable Credit Loan Fund, set up in partnership with our member Social Investment Scotland. It will help more people access affordable credit, delivered by responsible finance providers.
The new loan fund will be available to responsible finance providers as a repayable loan over 10 years, to help them expand their loan book to reach many more people. In addition to loans, responsible finance providers also offer their customers a wide range of financial inclusion services, including debt advice, savings opportunities, income maximisation and budgeting services. The investment will support more people to access these services, from organisations like Scotcash, Moneyline and Conduit Scotland.
The launch of the fund was accompanied by the release of a new short film, Speaking out for Fair Credit, featuring actor and activist Michael Sheen, and testimony from customers who have been helped by some of the UK’s affordable lenders. The video highlights the impact not-for-profit lenders can have in borrowers’ lives and asks that government, the business community and civil society support this sector.
Very Rev. Dr John Chalmers, former Moderator of the Church of Scotland and Chair of the Affordable Credit Action Group, said:
“The poverty premium means that those who can least afford to pay for credit end up paying the most. While credit is not a substitute for decent wages or welfare benefits, more affordable credit has a vital role to play in tackling poverty. If more people in difficult financial circumstances were able to access the support of the social lenders set up to offer them affordable, alternative sources of funds, that would save them significant sums of money, enabling them to improve their quality of life. I welcome this important new initiative.”
Michael Sheen said:
“High cost credit has for too long been targeted at those who can least afford it and those who are most vulnerable in our society. The need for ethical alternative providers is clear, whether they be on our local high streets or available online. But it’s not just about creating more providers – we need to do more to enable them to compete with the high cost providers and to provide vital financial support to communities across the UK, putting people before profit.”
If you are interested in accessing or finding out more about the fund, please visit the SIS website here.
You can read more about the work of the Carnegie UK Trust here.
You can see Very Rev. Dr John Chalmers speak at the Responsible Finance annual conference on 21st and 22nd March in Glasgow. More details are here.