In an era of austerity – characterised by stagnant wages, widespread public spending cuts, and increased fuel, food and transport costs – the need to provide people with an alternative to rent-to-own companies, door-to-door moneylenders, and the payday industry has never been greater. But despite several government-funded initiatives in recent years, the scale of credit unions and community development finance institutions (CDFIs) remains woefully inadequate to provide any real brake on the inexorable growth of the legal loan sharks. The question arises as to what ambition policymakers really have to develop affordable financial services for people on low to middle incomes? There is certainly no cohesive strategy in place at the moment. In my view, a fundamental issue needs to be addressed. The question is why do we have two models for delivery – credit unions and CDFIs? Credit unions – deposit-taking institutions – have traditionally been cautious lenders due … (To read the full article, subscribe below)
Damon Gibbons is director of the Centre for Responsible Credit.
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