Poor but honest people not helped by the banking system – and that is an understatement if ever there was one.
We were driving home from Wales on Mother’s Day after seeing our daughter and granddaughter (and son-in-law), listening to the radio – Radio 4 – and both looked heavenwards when the next programme to come on was going to be Moneybox. That will be boring, we said, but we could not have been more wrong. I should have known that from past experience of hearing the programme.
One report made me feel angry. It was about the banks – not bankers’ bonuses or the effect that supporting failing banks has had on the economy, but about a report on banking which had just come out from the House of Lords – from the Select Committee on Financial Exclusion – which criticised the fact that so many people in this country are still “unbankable”.
It is a situation which forces people in to pay-day loans. This House of Lords report says that more than 1.7 million adults in this country do not have a bank account, mainly because a bank would not give them a bank account. There will probably be many among that number who do not even bother to try, but there are plenty who have tried and failed.
They spoke to one such person, a single parent from Southampton – yes, just 5 miles down the road from me, which brought it home a bit. She was 27 years old with two children aged 2 and 5. She sounded intelligent and was articulate. Her income is mainly benefits. She can’t get a bank account. She takes out a pay-day loan for Christmas. She tries not to think about how much it costs. She knows full well it is not the right thing to do, but she has no alternative – £500 for Christmas, and it will take the year to pay it off.
They spoke to a man from Grimsby who has a partner with a brain condition. He is a full-time carer. If anything goes wrong on his limited income, he is stuck. The Banks will not give loans to people who are on benefits, however careful and diligent they can show themselves to be.
The report said that the Government and the FCA should bring in further legislation about payday loans. They also commented that, for those who are lucky enough to be bankable, that the cost of unauthorised overdrafts is excessive – a potentially huge added burden to people who can ill afford it.
There was a call for basic bank accounts. Some banks try to take this seriously, others don’t. It needs government to act. The radio report also mentions the impact of recent changes to the Benefits system. The Select Committee was not set up to look at this, but it could not ignore the big impact of this.
There are, of course, Credit Unions, and in many places, Churches have been involved in setting these up, or have supported them. But they are not strong enough to deal with the problem. They could be one day, but they need time to grow.
If this all interests you, a link to the Government website for the report is here:
and a link to the programme is here: