MPs back 'financial inclusion' for the worst off
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The poor pay more for their loans than the better off, according to a committee of MPs that has called on the government to crack down on illegal moneylenders and introduce new laws for credit unions. The treasury select committee of MPs also wants the government's social fund to be a "more effective" lender and for the commercial lenders to share more data about their customers to try to prevent them being overburdened by debt. John McFall, the chairman of the treasury select committee, also said the savings industry was "not fit for purpose" in encouraging people on lower incomes to save. The committee intends to discuss whether savings should be added to the list of issues currently covered by the government's Financial Inclusion Taskforce, which focuses on credit, advice and banking. The problem of saving has been highlighted by the collapse of the Farepak Christmas saving scheme, which had around 150,000 customers but was not regulated by the Financial Services Authority. Mr McFall has written to the FSA and Department of Trade and Industry for clarity on regulation of savings schemes such as Farepak, which is currently being analysed by the Office of Fair Trading. The treasury select committee report finds that 43% of the population have no savings at all and 15% of the population have only half of their monthly incomes saved. The National Consumer Council told the committee that 7.8 million people were excluded from mainstream credit markets while the Personal Finance Research Centre, which is supported by the Joseph Rowntree Foundation, said that 3.3 million people "lack ready access to the mainstream credit market". |
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