Press Release

RESPONSIBLE FINANCIAL MANAGEMENT THE FOCUS OF FRINGE EVENT

26 September 2007

The poorest people in society are having to pay the most for credit, according to Treasury Select Committee Chairman, John McFall MP.
 
Speaking at a fringe event at the Labour Party conference in Bournemouth, Mr McFall said: “The financial services that most people take for granted are not available to many vulnerable people in our society -- or are only available at a premium.
 
“The poorest people are getting a raw deal in the credit market. Financial exclusion is a major problem, and is closely linked to social exclusion.
 
“The Treasury must continue to take a lead in tackling this issue and develop a cross-departmental strategy to ensure success in the long-term.”
 
Mr McFall met Economic Secretary to HM Treasury Kitty Ussher, Stephen Sklaroff, Director General of the Finance and Leasing Association (FLA) and Teresa Perchard, Director of Policy at Citizens' Advice for a breakfast discussion on Debt and the 21st Century Citizen.

Stephen Sklaroff, Director General of FLA said:

"Readily available and affordable credit is a major force for good in society. It allows the less well-off to share in the proceeds of economic growth. The FLA’s members provide credit to many individuals who would otherwise be excluded from the market. To do so responsibly, we need to be able to share relevant data. The Government can help us do this by granting access to the right information. But consumers too must be responsible borrowers. Better financial education remains a high priority."

Teresa Perchard, Director of Public Policy for Citizens Advice, said:

"There is worrying evidence that while many have enjoyed the benefits of the credit boom, a large and growing number of people continues to pay the price, becoming overwhelmed by serious debt that can have a devastating impact on their lives. Local bureaux are now dealing with 6,600 new debt problems every working day, double the number ten years ago. Even more worrying are the signs that people are struggling not only to repay credit, but also to afford day-to-day essentials.

"We still see widespread evidence of people being lent much more money than they can afford to pay back, with many companies actively marketing expensive credit and loans to people who are already struggling. We need to build a culture in which lenders do much more to check that borrowers are really in a position to keep up repayments when they take out credit as well as people borrowing responsibly.  We want to see creditors being more willing to negotiate with people in debt, and to work with us in helping people manage their debt problems effectively. We need to build a healthier climate in which people have the understanding, skills and confidence to deal with money matters confidently."

Speaking at a Citizens Advice/FLA fringe meeting on personal debt Kitty Ussher said:

“Problem debt is bad for the economy and for individuals. That is why the Government created the Financial Inclusion Fund, which has already paid for 100 new debt advisers, mostly in Citizens Advice Bureaux. Further action is being taken on financial education and generic financial advice in order that we can tackle these issues in the medium and long-term. Credit unions have an important role to play in the provision of affordable finance. The Government is working hard to empower community-based lenders.”