A Financial Inclusion Act
Given the unprecedented support our financial institutions have received in the past few years, it is vital that they recognise the obligation of their responsibility to society. We are campaigning for a Financial Inclusion Act, which would ensure that all people have equal access to routine financial services and credit within their means.
The financial sector must understand their responsibility to society – whose taxes, jobs and livelihoods have been put at risk by their failure. All people should have equal access to routine financial services and credit within their means. Banks should no longer merely be able to cherry pick the most profitable customers, but ensure that their operations serve every part of the community equally.
We are campaigning for the introduction of a Financial Inclusion Act, similar to the Community Reinvestment Act in the USA. This would ensure that all financial organisations must engage with, design services for, and invest in people from all geographical areas and income levels. This would require banks to report that:
- All their delivery systems are readily accessible to geographic areas and individuals of different income levels within their area of business
- Changes have been made that have improved the accessibility of its delivery systems to low to moderate income areas and individuals
- Services are tailored to the convenience and needs of those that it is required to serve
In the USA, financial institutions have often chosen to route a substantial portion of their engagement in alternative financial institutions such as credit unions or CDFIs. Mainstream financial institutions would be free to choose a similar partnership route in the UK.
Vulnerable households have been disproportionately affected by rising household utility and food bills, making it difficult to build up a savings cushion to protect themselves against the recession. Many lower income households do not have the option of saving for the future and have no choice but to borrow to maintain an acceptable standard of living. This is not a question of making cheap and easy credit available to fuel a consumer society; financially excluded households need access to fair, affordable credit to survive.
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