Wednesday, 10 January 2007

American Rip Off Lenders Form Coalition for 'Financial Choice'

A group of U.S lenders including payday lending companies and cheque cashers have formed the strangely named 'Coalition for Financial Choice' which urges Government to stop punishing the sector through regulation and suppressing 'innovation' in the alternative financial sector.

The Coalition announces its own birth by stating that financial services should be available to all, not just the wealthy, but goes on to conveniently ignore issues of price, conditions of offer, and social responsibility.

In their first publication, which is a four page justification for the existence of 'Alternative Financial Services (AFS) Providers' the Coalition expresses the view that those people excluded from mainstream financial services should not be assisted to return there:

"Frequently, in discussions such as this, a theme emerges suggesting that the low-income consumers are disadvantaged because they are forced to use AFS providers. The assumption is that their lives would be substantively (sic) improved if they could be moved "into the financial mainstream" and begin using banks and credit unions. However, the reality is that this simply won't happen. Nor should it."

The Coalition raises the spectre of illegal moneylending operations as justification for regulatory support for Alternative Financial Services providers in the same way that door to door moneylenders do in the U.K. But in reality both types of providers - door to door lenders and Alternative Financial Services such as cheque cashers - only exist because of the failure of mainstream lenders to meet the needs of people on low incomes. Talk of illegal lending points us in the wrong direction completely. Have we really decided that we should let mainstream banks - which this week in the UK will report £40 billion of profits - off the hook?

We need better provision within the mainstream financial services sector (sometimes working through the credit union and CFDI sectors if required) for low income households, and no acceptance of high cost and extortionate lending from either legal or illegal sources.

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