On December 12, I attended a meeting in Westminster about what still needs to be done to improve people’s access to money in the UK, three years since legislation was adopted to force banks to be transparent about where they lend (and don’t lend) money.
Consumer credit in the UK is only 2 per cent off its 2008 peak thanks to static interest rates and the rising cost of living. Damon Gibbons from the Centre for Responsible Credit says it will be interesting to see how much further consumer credit can increase before households have to cut back on consumption to afford repayments. “Household consumption is 65 per cent of GDP, so any cut would raise the risk of recession.”
As people come to rely more and more on credit, access to safe and fair credit becomes vital to stop people turning to loan sharks and payday lenders. Where safe credit is not available debts can spiral quickly, leading to mental health issues, child poverty and other problems.
“If there isn’t access to banks then loan sharks will have a field day,” said Gareth Thomas, a Labour MP. “In that way banking data disclosure is vital.”
Lord Sharkey, the Lib Dem peer chairing the meeting, suggested a smaller working group come together to look at how to improve data disclosure, and to use this data, ahead of the next Financial Services Bill, which could provide another opportunity for change.
All parties agreed that the data should not be used to “bash the banks over the head”, but rather to identify areas of weakness in the system and come up with ways to help people in times of need.