Civil society groups hear call for anti-usury laws and major finance reform

Civil society groups hear call for anti-usury laws and major finance reform

By staff writers
29 Nov 2009

Some 2,000 people from 150 civil society groups, churches, mosques and synagogues heard a call last week for the UK to introduce a ceiling on interest rates. The move follows evidence gathered over months of listening to the impact of the financial crisis on ordinary people.

Among those responding to the five-point proposal by London Citizens - the city's community alliance of faith congregations, charities and trade union branches - were politicians from the three largest political parties (Labour's Stephen Timms, the Tories' Greg Hands, and Lib Dems' Vince Cable), leading financiers (the Corporation of London, the British Bankers' Association, Barclays, KPMG and others), the Mayor of London and bodies such as Fair Finance.

"Despite historically low interest rates and a massive taxpayer bailout of the banks, ordinary people across London have been forced into the hands of legal loan sharks in order to gain access to credit," said Paul Regan, a London Citizens trustee and Methodist minister and a pioneer with the Newham Community Renewal Programme.

"It's time to restore responsibility," Regan added.

The London Citizens Autumn Assembly also saw the launch of a new economics foundation (NEF) report, 'Doorstep Robbery - Why the UK needs a fair lending law', which argues for a cap on the cost of credit as well as new rules which would oblige banks to make more loans available to the less well-off.

The study by Veronika Thiel reveals that three million UK households pay hundreds of thousands to "legal loan sharks" because of lack of access to credit from banks. London Citizens and NEF argue that the UK should follow the example of major European countries and introduce a cap on the cost of lending by financial institutions, thus making borrowing at interest rates of 50 or 500 per cent illegal.

The new NEF publication shows that in Germany and France poor people have greater access to mainstream credit than in the UK - disproving the Government's stated objection that such curbs reduce the flow of credit.

As well as a cap on interest rates, the assembly called for an expansion of local, mutual banking such as credit unions, to ensure the low-paid have access to mainstream credit; a financial literacy programme for schools; a statutory code of responsible lending and the expansion of the living wage, a basic family minimum which is the best insurance against debt.

The agenda has been drawn up through six months of listening campaigns, surveys, and democratic assemblies, attended by leaders from London Citizens members in south, east and west London. Members are mostly churches, mosques, synagogues, charities, trade union branches and ethnic associations.

The event heard powerful testimonies from ordinary people whose lives have been destroyed by legal loan sharks, and readings by faith leaders - including Rabbi Jonathan Wittenberg, Mgr John Armitage, Dr Abdul Bari (Muslim Council of Britain) and the Rev Ermal Kirby, a leading black church ecumenist and activist.

The readings recalled the prohibitions on exorbitant lending in the Jewish, Christian and Muslim traditions.

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