Actor and debt campaigner Michael Sheen is backing calls for a new Fair Banking Act to help tackle the crisis of unaffordable credit and problem debt, in a Channel 4 documentary broadcast on 10 March.
‘Michael Sheen’s Secret Million Pound Giveaway’ follows Sheen as he spends his own money paying off the debts of hundreds of people in South Wales. Along the way, it shines a spotlight on the impact that unaffordable credit and problem debt has on individuals, families and communities across the country.
Why we need a just banking system
At JustMoney Movement we believe that every person is made in the image of God and should be treated with dignity. Jesus proclaimed good news to the poor and called us to love our neighbours and seek justice for the oppressed. We want to see a just banking system that enables everyone to access the services they need to support their families and to lead full and flourishing lives. But millions of people are not served by the mainstream banks, leading them deeper into poverty and causing growing misery and suffering.
Many people on low incomes are refused services like loans, overdrafts and insurance by the mainstream banks. Some people are more likely to face problems accessing credit and other financial services: people living in deprived areas, disabled people and those from minority ethnic groups for example (Fair4All Finance).
The cost of living crisis has made this worse. More than 1 in 5 people in the UK are in poverty (JRF), struggling to make ends meet, let alone having enough to put by for a rainy day. Up to a third of adults in the UK have no savings at all (money.co.uk).
This means if something goes wrong, or happens out of the ordinary, like a car breaking down or an illness, people excluded from responsible and affordable credit have no choice but to borrow at eye-watering interest rates from high-cost lenders, potentially including illegal money lenders like loan sharks.
It doesn’t have to be this way.
Sarah (not her real name) has a story of successful access to affordable credit (with thanks to Fair Finance). Sarah is a shift worker in a fulfilment warehouse. She works around her daughter’s school hours and in April she worked less because of the school holidays. But then some unexpected bills came in and she needed help. She explains:
“I don’t have an overdraft or much in savings, and lots of places won’t give me a loan because I don’t have a high credit score and I’m on low wages. I was really worried about what we’d do – we had to pay the vet and we needed to fix the washer but I couldn’t find all the money in one go, so I was happy to use Fair Finance.”
Sarah managed to get an affordable loan through Fair Finance and could afford the repayments. But for millions like her, without access to a community bank or credit union, they turn to loan sharks and get into a spiral of debt. Fair and affordable credit isn’t a solution to poverty: we need widespread, systemic changes to our economy to tackle poverty and inequality. But right now millions are struggling and a small loan could be a vital lifeline, helping people in difficulty and preventing them getting into real crisis.
What is a Fair Banking Act?
Together with over 30 organisations that are part of the Fair Banking for All Campaign, we are calling for the Government to introduce a Fair Banking Act that would require banks to transparently share information about their performance in tackling access to credit . This could be through providing affordable credit to people on low incomes themselves, or by supporting community-based credit providers such as credit unions and CDFIs (Community Development Finance Institutions) to do so. It would create a ratings system to show which banks are doing well and give the FCA (Financial Conduct Authority) the tools and incentives to drive change.
A similar piece of legislation – the Community Reinvestment Act – has worked well in the United States for almost 40 years, and research shows it could make a positive impact in the UK.
Take action now! Please write to your MP using our simple e-action asking them to support a Fair Banking Act. Together we can seek fairer banking for everyone.
More information on the Fair Banking Act and the Fair Banking for All Campaign is available here.