Shadow Communities Secretary, Mark Isherwood AM, whose brief includes financial inclusion, has spoken at today’s ‘Responsible Finance Annual Conference 2017’ on the challenges and opportunities for the responsible finance sector post-Brexit.
Addressing the Cardiff conference, Mr Isherwood, a qualified banker who worked in the Building Society sector prior to his election to the National Assembly for Wales in 2003, stressed that as the Centre for Social Justice has stated, we need to “enable consumers to take on credit without taking on unmanageable debt, allow debtors access to the type of debt advice right for them, give every consumer the opportunity to learn how to manage their money effectively, and encourage Britain to develop a savings culture again”.
He said that much will depend upon Credit Unions in Wales working together and growing their saver base, enabling the development of smaller, shorter term loans and other products, and that financial affordability, education and inclusion are key, with Credit Unions making personalised assessments and serving many who would otherwise be excluded from mainstream credit.
He said:
“The UK Credit Unions Act freed credit unions to work with organisations such as housing providers, community groups, employers, social enterprises and charities to bring financial services to new groups of people.
“Credit Unions need to grow and become the preferred alternative to high interest lenders.
“It is estimated that in 35 million of the 52 million loan transactions annually in the UK, people would save by using a Credit Union, yet only 2.5% of people in Wales currently use Credit Unions – compared to 46% in the United States.
“Speaking in the Assembly Chamber last month, I called on the Welsh Government to examine the not-for-profit community banking model developed in Wales by Responsible Finance - working with credit unions, where credit unions can’t; raising capital from other social enterprises, businesses, Local Authorities and Town Councils; providing finance and support for people, businesses and social enterprises that cannot access finance from high street banks; and working with others, including WLGA, Cartrefi Cymru and Wales Co-operative centre, to develop a Public Bank model.
“They are concerned that the Welsh Government’s Development Bank could end up competing with them at higher cost, when there is a compelling business case for the Welsh Government to support them with very limited funds - where £100,000 Welsh Government funding would enable £3 million lending and deliver jobs for £4,000 that would cost the Welsh Government model £35,000 each.”
He added: “The referendum result and economic uncertainty clearly poses challenges for the social sector. Whatever comes next, it is needed now more than ever – building on the commitment of social investors to work in partnership with them to meet the challenge.”
ENDS