29.03.2012 It is estimated that 370,000 businesses, 3,300 social enterprises and 3 million individuals face ‘financial exclusion’. To serve them, we have to know who they are and where they are.
The chief executive of the Community Development Finance Association (CDFA), the representative body for “ethical finance” providers, today reacted positively to a new Private Member’s Bill calling for greater disclosure in the banking system.
The sponsor of the Banking (Disclosure, Responsibility and Education) Bill, MP Chris Evans, said in his speech to Parliament:
“I believe that everyone should have access to affordable financial services, but the sad reality is that that is not the case. The economic conditions following the financial crash have caused hardship for families and meant that more people have been driven into financial exclusion. At the same time, banks have become more reluctant to lend and give credit. As a result, doorstep lenders and illegal loan sharks, who charge extortionate rates of interest, have found their business picking up. That has made financial exclusion worse and at the same time has pushed more people into debt and poverty.”
Ben Hughes, CDFA’s Chief executive commented that:
“Without full disclosure from credit providers across all lending markets it’s impossible to know exactly where there are gaps or market failure. We estimate that that 370,000 businesses, 3,300 social enterprises and 3 million individuals are ‘financially excluded’ – they can’t access mainstream financial services. Yet community finance providers – the unsung heroes of the banking sector – have been successfully providing ethical credit to businesses and individuals for over 10 years. Community finance could meet the needs of many of these excluded customers. But if we can’t identify where they are, then CDFIs can’t help them.
“Many banks do work really effectively with their local community development finance institution. And CDFA are pleased to be working with the British Bankers Association to implement a national bank-to-CDFI referrals scheme. But we need greater transparency in order to identify and understand better which communities face difficulty in accessing mainstream finance. Then we can locate, and better resource, community finance providers to ensure that individuals and enterprises that are outside of the banking system get access to just, community, finance.
“This Bill would be a great start.”
CDFA recently published its JUST Finance manifesto, setting out a simple – but ambitious – plan for growth of the community finance sector. Step 2 of its 10-point plan is to “Require finance service providers to disclose lending data.”
More information
- CDFA’s JUST Finance campaign
- Easy ways to get involved and support JUST Finance