They look like good ideas. I’m interested in the scope of 2) – would that extend to pawning agreements with Cash Converters etc?

Out of interest – who framed the choices and made the final decisions on what items would be chosen as this top 5 – was it the leaders of the member organisations of London Citizens who are then mobilising their own members from the top down, or was there some way of the grassroots voting etc?

isn’t there something of a contradiction between “increase the access to credit of the financially excluded” and calls for responsible lending?

Making sure banks don’t mislead people is one thing (transparency, responsible marketing)*, but otherwise “responsible lending” means “lending to people who will be able to repay” doesn’t it? – meaning those who will be unable to repay are financially “excluded”.

* There is already a great deal of legislation trying to ensure banks don’t mislead people.

N.B. anybody interested in reform of consumer finance and in what the Yanks are up to should read through recent posts at http://rortybomb.wordpress.com/ and some of the links therein. Not everything applies to the UK, but there’s lots of interest. Check out the stuff on credit cards.

I can see a difficulty in trying to achieve

i) greater access to credit for the financially disadvantaged;
ii) an end to high interest rates; and
iii) a charter for responsible lending.

Pretty hefty contradiction isn’t it?

KPMG and the City of London to give lessons in “responsible lending and responsible borrowing” .. someone is having laugh!

I’m all in favour of action to restrict predatory lending- and there are companies out there who can’t be described as anything other than loan sharks. I actually remember a ‘Panorama’ programme featuring a passionate speech on the subject by the Labour spokesman for consumer affairs in the 1980s- some fellow called Blair. Pity he never got near power, or we’d have had that problem sorted out.

But on expanding lending: no. The problem is poverty but the solution is almost certainly not credit.*

Increase the incomes of the poorest instead. That way they are less likely to need loans for the necessities of life, will be more able to access loans without predatory interest rates, and will be less likely to default on any loans they do take out. Or they may not even need to take out loans at all.

*(Yes, I have heard of the Grameen Bank. And no, I haven’t seen the research that suggests that something which has benefited a minority of women in rural Bangladesh is the magic bullet for poverty in inner London.)

Attacks on high-interest short-term loans are deceptivly attractive. However, its rather questionable if they actually work in consumers interests. Surely, some people use these irresponsibly and they can be badly sold. But the idea that all the people using such services are morons just doesn’t play out.

Rather, we have a “free” banking system. What this means is that fees for bounched cheques, breaking credit card limits, overdraft charges, ect are all very high. Taking out a high-interest loan for a period of a few weeks can avoid these charges and provide a substantial saving to the individual concerned. Having a seemingly ridiculous APR doesn’t mean nobody could actually benefit from the service. Mutuals and credit unions follow the same model as the banks here, so I see little to commend them for in this regard.

Making this type of credit unavailable while leaving the rest of the structures standing is unlikely to actually benefit people with debt issues greatly. It is the kind of completly not joined up thinking I would expect from government by survey, however.

[4] It’s called a credit union.

8: Many (most?) credit union charge over 20% interest in some or all cases, so apparently not. Credit Unions are also less willing to lend than many other operators- being a mutual, they are working for savers benefits after all, which means theres a limit to how much risk is acceptable. We can debate if this is bad or not, but making them the only viable option does not increase credit availability for the financially excluded.

[9] There’s financially excluded and then again there’s financially excluded. Because I don’t own my home, a lot of lenders would exclude me. But then again I’m a pensioner so how would I repay a loan anyway? The debt that my daughter’s taken on appals me, but she can service it so my emotions don’t count.

I’m sorry but people don’t have to spend £250+ per child at Christmas and any single mum who thinks she does has more than financial stuff.

There are valid uses for credit beyond spending splurges- as I outlined some of. Circumstances can change, meaning that one month it might be hard to make a payment. In many cases this has pretty bad consequences- with my local credit union included. Being able to get credit in those circumstances is pretty important. Beyond that… how does the above make your answer of “credit unions” any less redundant?

[11] You’ve lost me. What kind of circumstances do you have in mind?

2. Should be given a catchy name. How about “Giving a hand up to loan sharks”? Hmmm, that works

3, ditto. What about “making sure you can’t borrow cheaply because it will all depend on whether someone saved enough in your local postcode”. Yup, another fine idea.

4. I think it’s always nice to have a recommendation that has only been tried by the previous 1000 governments.

“5. Create statutory charter for responsible lending”. If ONLY someone had thought of that. The credit crunch would clearly not have happend, if only someone had had a statutory charter with the right wordings.

You can’t ask people polling questions about something like a financial crisis and expect it to add up to an answer, or least one that works. Any more than you can write computer code by getting each person to vote on their favourite line of code.

What, five priorities but nothing in them about:

making the rich pay for the crisis,
a radical redistribution wealth and power,
nationalising the banks,
closing tax havens,
ending the obscenely inflated rewards a tiny minority award themselves,
launching a crash building programme to provide new housing,
greatly improved pensions and social security benefits,
creating an egalitarian society?

Poverty of aspiration is the phrase that springs to mind. Someone must have searched long and hard to find the claimed thousands of people who could agree on setting their sights so pathetically low.

@12 Bob gets paid gbp12k a year, and has a job that requires him to drive to work (because he lives outside London and works 4AM shifts, say). Bob is just about managing to make ends meet; then his car expires. At this point, he can either borrow the money to get it fixed or buy another one, or he can lose his job. What’s your non-instant-debt-access solution? (nb: ‘he should have saved money’ isn’t one)

@14 a puppy for every home was also considered and rejected at the “oh sod off, we’re talking about real policies not adolescent manifestos for Crass fans” stage.

(that’s not entirely fair: I rather like Crass, and think that everyone ought to listen to them Or Present Day Equivalent when a kid)

11) As John B said. If people have all their expenditure, or most of it, committed for that month, a loan may be very helpful if theres an unexpected charge- say, a parking ticket, the plumbing breaks, ect. Without one, an otherwise managable payment could be defaulted on, an account overdrawn, a cheque bounced- all much worse than a loan they can pay off next month, even with very high interest.

Return to the controls mortgage borrowing which used to exist 25 yrs ago.
1. 10 % deposit.
2. Maximum of 4 x times single salary.
3. Self certified mortage to be based upon the average of 3 years salary supported by letter from an accountant.
4. Buy to let to require at least 30% deposit.
The increase in the amount people could borrow greatly increased property prices. see V Cable ” The Storm”. Increase in property prices benefits builders, landowners, banks and mortgage brokers, not buyers.
Remove VAT on house repairs to encourage renovation of property in poor shape rather than building new homes.
A home shuld just be that, a home, not a form of speculation.

“to extend the Living Wage campaign to all low-paid sectors nationally;”

Hurrah! Finally the abolition of the National minimum wage. For of course living wages differ in different parts of the country.

This is just the first step of course. Now that this simple and obvious point has settled into lefty minds, we can get about destroying national wage rates as well.

Labour markets are local, living costs are local so wages should be local as well.

Hurrah!

[17] If people have to spend all their income each month they won’t have anything left over to repay a loan, will they?

The idea that someone earning £12k year can afford to run both a car and a mortgage is absurd.

20) Not all every month, but if they have to spend *more* than their monthly income and savings due to an unexpected cost- then the type of short term loan that is being sought to be banned is very, very helpful. Studies have been done showing this is the case- defaulting is very expensive.

None of the measures are talking about buying cars and houses- it would be unusual for loans for those goods to be at these really high levels, and its certainly not what we are defending so take that outrage elsewhere. Although its only due to the structure of our economy renting is a scale cheaper than buying…

“Return to the controls mortgage borrowing which used to exist 25 yrs ago.”

As I’ve personal reasons to recall, Britain experienced previous house-price bubbles in the early 1970s, as the result of low interest rates due to the “Barber boom”, and then again in the late 1980s into 1990 because Nigel Lawson, as chancellor, had manipulated interest rates to ensure a “competive exchange rate” for the Pound prior entering the Pound into the European Exchange Rate Mechanism. Inflation was revived so Lawson resigned in 1989 after rowing with Alan Walters, Mrs T’s personal economic adviser, and his successor as chancellor, John Major, was left to do the silly thing.

Conservative governments have a terrible record for mismanaging the housing market, which is why it is all the more surprising that history was allowed to repeat by this Labour government. I’m not a regular fan of Hegel but he was absolutely right about one thing:

“What experience and history teach is this – that people and governments never have learned anything from history, or acted on principles deduced from it.” [Philosophy of History]