In 2002, the New Economics Foundation (nef)‘s report Profiting from Poverty showed that licensed moneylenders who charged the highest annual rates offer loans starting at 160 per cent and soaring to 1,564 per cent. For families unable to access any other form of credit, such extortionate interest rates rapidly trap them into a cycle of un-payable debt. And the profits to be made from poverty are substantial: a rapidly expanding sub-prime lending industry which in 2004 has a turnover of over ￡16 billion a year and a doorstep lending business of ￡3.3 billion annually.
The Community Banking Partnership (CBP) developed by nef, NACUW (National Association of Credit Union Workers) and Community Finance Solutions has drawn on the practical expertise of those working in the front line of financial exclusion and brings together credit unions, the community finance sector, mainstream banks and money advice agencies for the first time to deliver a ‘one-stop-shop’ approach to financial inclusion. Traditionally, ‘doorstep’ lenders have been closer, louder and more immediately available. By joining up, and scaling up alternative finance, the CBP is intended to offer a viable, easily accessible alternative for the financially excluded households. This service is focused on individual need, providing money advice and support that will help improve financial literacy, helping with bill and debt repayments, and also delivering savings facilities, affordable loans and access to basic banking services.
Read the document (570 KiB)
Conaty, Pat, Mick Brown, and Bob Paterson, Community Banking Partnership: A joined-up solution for financial inclusion, 2004