The Community Development Finance Association (cdfa) has welcomed a proposal to ensure that banks help to provide more services to people on low incomes, contained in the Budget report.
Banks will have to give “adequate support” to non-profit lenders such as community development finance institutions (CDFIs), which provide loans to people who can’t get finance on the high street. The Government will shortly consult on whether this will be imposed through regulation or a new levy on retail banks.
Bernie Morgan, Chief Executive of cdfa, which is the trade association for the UK’s CDFIs, said: “This could be a major win for people on the lowest incomes, as well as the community development finance institutions (CDFIs) which provide them with financial services when the banks can’t help. We have been calling for increased support for CDFIs from banks for many years, most recently through the Better Banking coalition, and this is potentially a major breakthrough for us. But it is not enough simply to consult on this measure – it has to be enshrined in government policy.”
Also commenting on the Chancellor’s announcement that everyone will have the right to a basic bank account, Bernie Morgan added: “Introducing a guaranteed basic bank account is an important step in the right direction towards financial inclusion. But this alone is not enough to help people who are frozen out of our financial services system. Not everyone with a basic bank account uses the facility. Banking staff do not always have the expertise or the inclination to help basic bank account customers, and people on the lowest incomes do not always have the confidence to use the account.
“A guaranteed basic bank account will help many people, but it is not a ‘silver bullet’ to end financial exclusion.”