A proposal to use £200m of fines on banks and payday lenders to support community finance organisations such as credit unions has been launched by the national community organising charity Citizens UK. The idea, which is supported by the Archbishop of Canterbury’s Task Group on Responsible Credit and Savings, would see the creation of a Community Finance Foundation to help ethical alternatives to high-cost credit expand their reach and improve their sustainability. It is estimated that over the next five years such a venture would help 500,000 people avoid high-cost credit, saving them over £200m per year in interest and fees and reducing the cost of problem debt on wider society by £1.4bn.
The proposal is part of Citizens UK’s Civil Society Manifesto, which will be put to major party leaders at a unique ‘Accountability Assembly’ on May 4th in Methodist Central Hall, Westminster. The idea has come from Citizens’ Just Money campaign, which in 2009 was the first to call for a cap on the cost of credit. Campaigners from mosques, churches, synagogues and schools joined the Bishop of Stepney to celebrate the introduction of that cap on 2nd January this year by turning up outside the Wonga Headquarters in London wearing baseball caps.
The Community Finance Foundation is supported by a range of charities and think tanks, as well as the Archbishop of Canterbury’s high-profile Task Group on Responsible Credit and Savings. Sir Hector Sants, the Chair of the Task Group, said:
“A vibrant community finance sector is in my view an essential element of a fairer and more inclusive financial system. This will not be achieved without significant investment and the Archbishop’s Task Group believes the Community Finance Foundation can be major part of meeting that need.”
Citizens UK has pledged to find 50,000 new members for community finance organisations from its own member organisations over the course of the next Parliament. Community Organiser on the Just Money Campaign, Emmanuel Gotora said:
“This is about protecting our families and our communities from the devastating effects of exploitative lending and debt. Our members are willing to step up and play their part, but we need Government to do its bit too. Every other country with a strong community finance sector has some form of infrastructure to make that possible, and the record levels of fines we’ve seen in the banking sector give us the perfect source for that support. Problem debt will continue to be a huge problem in the next Parliament, so why not use the proceeds of a broken financial system to start to build one that can really help people cope with the pressures of tough times?”