LONDON–The Co-op Party here as well as this country’s credit unions are hailing a report from the London Assembly that calls for a more diverse and socially oriented banking system.
The report on financial inclusion, published by the Greater London Authority’s Economy Committee, says the capital “is a leading global financial center, but many of its citizens are struggling to access quality and affordable financial services,” according to CO-OP News.
The report makes a number of recommendations to London Mayor Sadiq Khan to tackle financial exclusion, including looking at how “community banks and credit unions could be supported to work together to provide products and services that improve the financial health of Londoners,” according to CO-OP News.
“Credit unions should be seen as one of a number of important players in the sphere of mission-oriented banking,” the report states, adding the credit union sector should be put forward among other solutions, such as responsible finance providers.
According to the report’s research, financial exclusion means:
- 1.5 million people in the U.K. lack a current or basic bank account
- Between 10 million and 12 million people regularly use high cost payday lenders
- The University of Bristol says being poor can cost an extra £490 a year, with more expensive forms of credit, and more expensive forms of billing such as prepayment meters.
- These problems are likely to be worse in London, thanks to high housing costs, flat wages and high levels of self-employment and small businesses.
Other recommendations in the report include “a summit with industry leads, fintech providers, not-for-profit organizations, local government, and the charitable sector to explore new ideas and innovations that can support the financial health of Londoners,” and ensuring that the authority’s “microloan fund is promoted effectively to SEMs in London’s poorest communities struggling to access affordable credit,” reported CO-OP News.
The report calls for a money advice week in the city to promote these kinds of alternative credit options and using ad space on tube platforms and bus shelters to promote credit unions as a viable alternative.
“It’s less clear that Britain’s highly concentrated, highly commercialized banking system is good for the health of the economy as a whole,” said the U.K.’s Co-op Party in response to the report.
Meanwhile, Matt Bland, the head of policy and communications at the Association of British Credit Unions, Ltd., said he welcomed the “excellent” report.
“We were particularly pleased to see it recommend that the mayor take steps to support a broader role for London’s credit unions through promoting them, for example on London’s transport network,” said Bland. “There are 27 credit unions in Greater London who, at 30 September 2016, had 107,000 members and outstanding lending of £80 million. They have grown lending by 62% since 2012 and play a hugely valuable role in providing affordable credit and encouraging members to save alongside borrowing – the powerful Save As You Borrow technique – in communities and workplaces across the capital. “We look forward to the mayor’s response to the report and hope that he will act on the report’s recommendations,” Bland continued. “We are very encouraged by commitments the mayor made in his electoral manifesto around financial inclusion and the role of credit unions as well as his proposed Good Work Standard which highlights the role of credit unions in London’s workplaces…ABCUL strongly supports these efforts and looks forward to working with regional and devolved authorities on this agenda going forward.”