Scots Tenants Offered Affordable Credit by Housing Association

Margaret Blackwood Housing Association and Dunfermline Building Society have announced a preferential savings and loans scheme for tenants.

Unveiled at the Chartered Institute of Housing’s Financial Inclusion seminar in Edinburgh, the initiative will enable tenants and sharing owners to open an instant access savings account that will offer a preferential rate of interest on balances as small as £1.

Once account holders have made at least two deposits, they become entitled to apply for a loan of up to £500 at a flat rate of interest that is just 0.95% above the Bank of England’s base lending rate.

Jeremy Hewer, Project Manager for Margaret Blackwood Housing Association, said: “We are delighted to offer our tenants the opportunity of getting a high rate of interest on their savings as well as access to more affordable credit.

“Most high street lenders are just not interested in providing small, unsecured loans. This scheme fulfils a demand that has, up to now, been met by doorstep lenders charging exorbitant interest rates.”

Ken Dow, Senior Manager – Community Development at Dunfermline Building Society, said: “The Society is delighted to partner Margaret Blackwood Housing Association in this wider action initiative.

"The Savings & Loans scheme has been specifically designed to assist Housing Association tenants and allow them to make informed and affordable choices when dealing with their personal finances.”

This is the second programme reflecting Margaret Blackwood Housing Association’s commitment to promoting financial inclusion.

Jeremy Hewer explained: “This scheme complements our involvement in a Wider Role-funded initiative within Edinburgh. We have joined up with four other housing associations and with the local Citizens Advice Bureaux to provide financial health checks, advice and counselling to new tenants and tenants who have debt issues.

“But Edinburgh is only one of the 29 Scottish local authority areas in which we operate. We want to provide a nationwide service which improves the general level of financial literacy.

“We would like to hear from other RSLs who might partner us in delivering a comprehensive financial and welfare benefits advice service elsewhere in Scotland. They can contact me on 0131 317 0169 or email me at JeremyH@mbha.org.uk”

Bradford Debt Seminar, Sat 5th May

Bradford, the home of Provident Financial, is to host a seminar event to discuss the development of local financial inclusion and debt strategies on Saturday 5th May.

The event is being organise by The Rev Chris Howson, city centre mission priest for the Bradford Church of England diocese, who said: "We have some excellent speakers from Leeds and Sheffield - places that already have a new strategic plan about debt - that we could learn from. Damon Gibbons, founder of the Debt on the Doorstep campaign, will also be with us."

To register for the event, which is being held at Bradford University on May 5, from 1-4pm, contact Mr Howson on (01274) 727034.

Is Britain A World Leader in Financial Services Provision?

A recently published report comparing Britain and Germany's banking systems cast dount on the claim that Britain is a world leader when it comes to financial services provision.

The report, "The British Banking System: A Good Role Model for Germany?" published by the Anglo-German Foundation for the Industrial Society and written by academics frm the Universities of Birmingham and Heidelberg, focuses particular attention on the levels of financial exclusion and over-indebtedness in the UK that have resulted from the demutualisation of building societies and an absence of proper regulation.

"there seem to be fewer problems with over-indebted households in Germany than in Britain. The more widespread use of credit cards in Britain could be responsible for this. Aggressive marketing of these cards as well as excessively high penalty charges to credit card users who pay late, or are unable to clear their balances, contribute to the problem of over-indebtedness. The punitive charging in Britain is indicative of much more widespread cross-subsidisation in the provision of current accounts – high-balance, low-volume users generally cross-subsidise low balance high volume users due to low deposit interest payments and low charges (for those who stay within authorised credit limits, with punitive charges for those who do not, or cannot).

The relatively high profitability of British banks in recent years may therefore owe much to exploitation of their ‘complex monopoly’ power. In contrast, the lower profitability of German banks is associated with a broader supply of financial services to small enterprises and low-income households. However, the Sparkassen (municipal savings banks) and co-operative banks, which are the most active banks in these market segments, have had an above average profitability in Germany. These findings should be borne in mind by advocates of increased concentration trying to shift the German system towards the British model.

Public sector and co-operative savings banks are no longer a significant force in Britain, and indeed the government has been encouraging the development of Community Development Financial Institutions (CDFIs) and credit unions to fill the gap. Advocates of privatisation of the German public savings bank should also bear this in mind."

OFT - No 'Quick Fix' on Bank Charges

The OFT has backed off from making an immediate intervention to help consumers recover bank charges. In a move that will disappoint those millions of consumers that have been on the receiving end of illegal charges the OFT has announced that a review of charging policies will take place alongside a wider 'in-depth' study of retail bank pricing. Full details of the study will be announced in late April, and it is expected to be completed by the end of the year.

In a statement released on 29th March, clearly influenced by the industry, the OFT expresses ongoing concern about the level and incidence of bank current account charges, but sets out its desire to look at the wider relationship between default charges and so called 'free' banking.

John Fingleton, OFT Chief Executive said: 'The UK retail banking market performs well in many dimensions, especially relative to international norms. However, the issue of bank current account charges is a matter of real concern to the banks' customers, and raises wider questions about competition and transparency of pricing. The initial scoping work we have undertaken has demonstrated to us that this is not only an issue for those people who are being charged, but also for customers who are not defaulting on their bank accounts.'

Debt on our Doorstep expresses concern that no action has yet been taken by the OFT to force banks to reimburse customers for the billions of pounds of unlawful charges that have been levied in the past six years, and that there appears to be a willingness to look the other way whilst charges are levied on those with the most financial problems in order to maintain a system of free banking for others.

Damon Gibbons, Chair of Debt on our Doorstep commented:

"The levying of unlawful fees on default is cross-subsidisation at its worst. It makes those with financial problems pay for free current account provision for those without difficulties. If the banks say that they would have to end free banking for the majority by staying within the law on default charges, then that would appear to indicate a real lack of competition in the sector.

Surely, banks should still be expected to compete on current account charges and stay within the law for people who have financial problems. Why it is taking the OFT so long to come that conclusion is a real mystery, but it isn't giving consumers a great deal of confidence in their regulator that's for sure."