EDINBORO, Scotland–A new report published here says Scotland’s credit industry must break the cycle of financial exclusion experienced by the country’s poorest borrowers.
According to The National, a report by the Carnegie UK Trust’s Affordable Credit Working Group calls for a “step-change” in Scotland’s credit industry to remove barriers to accessing affordable credit and allowing Scotland’s poorest borrowers to access basic bank accounts.
The call to end the “poverty premium” comes in the wake of findings that interest payments to the high cost credit sector are around £20m a year from Glasgow residents alone, the National reported.
The report sets out a series of 18 recommendations for government and industry including investment in community finance and the creation of a government minister responsible for financial inclusion.
The Working Group, consisting of representatives from across Scotland’s financial industries as well as the third and public sectors, spent a year analyzing financial inequality before making their recommendations, the National reported.
Jeremy Peat, co-chair of the Affordable Credit Working Group, former chief economist of RBS and a visiting professor at the University of Strathclyde’s International Public Policy Institute, told the National, “Access to credit in Scotland is not a level playing field. Credit is – for a mixture of good and bad reasons – most expensive for those who can least afford it.”
The group emphasizes four calls to action, beginning with a call for the Scottish Government to assign ministerial responsibility for financial inclusion.
Employers are also being urged to partner with credit unions to make repaying credit union loans via payroll a standard workplace benefit. Lastly, the group are urging investment to support the growth of CDFIs with support from trusts, foundations and commercial and social investors.