Forcing UK banks to support credit unions would help keep loan sharks at bay | Heather Stewart
Nikhil Rathi, chief executive of the Financial Conduct Authority, made a pilgrimage on Friday from its glass and steel HQ in east London to the Pioneers Museum in Rochdale – the spiritual home of the co-operative movement,His unlikely day trip aimed to highlight the City watchdog’s role in opening the way to a doubling of the size of the mutuals sector – a Labour manifesto pledge,Among these customer- or worker-owned organisations, including huge companies such as John Lewis and Nationwide building society, are the 350 credit unions,These are locally based lenders whose interest rates are capped by law and whose clients tend to include the low-income consumers left behind by the big banks,Holding assets of £4.
9bn between them, the UK’s credit unions serve about 2 million members.Their US counterparts have more than 143 million.The FCA’s new report, which Rathi was in Rochdale to launch, included a series of recommendations aimed at encouraging credit unions to expand, and to offer more services.The Treasury has already promised to review the “common bond” – the legal promise that governs each credit union, for example specifying the area it serves – to allow these to adapt more easily to changing circumstances.Ministers have also set aside £30m to fund modernisation – updating credit unions’ IT systems, for example.
Yet campaigners for fairer lending fret that cash-strapped customers will continue to be left at the mercy of loan sharks unless mainstream banks are forced to do more.The need is certainly there.Visiting an employability project on a housing estate in Stockton this week, it was depressing to hear about residents resorting to loan sharks, often unaware of the cheaper and less unpleasant alternative of a local credit union.That chimed with evidence from a recent roundtable discussion organised in Glasgow by campaign group the Finance Innovation Lab, where low-income borrowers recounted their experiences to local MPs.“When there’s an unexpected cost like that you just need to get it sorted, but you’re left with no good options,” one woman said, citing a broken bed as an example of the kind of expense that can drive consumers into paying extortionate interest rates to unscrupulous lenders.
Recent research by Fair4All Finance, the government-backed, not-for-profit organisation that promotes financial inclusion, found that 1.9 million adults in Britain had turned to unlicensed money lenders or loan sharks in the past year.Dr Paul A Jones of Liverpool John Moores University is an expert on the credit union movement.He is optimistic about its future, and argues that some of the impetus for growth must come from within the sector itself.“We need more credit unions of a significant size.
We need more credit unions to get in the fast lane,” he says.“If you don’t want to, and you want to carry on in your village hall with 1,000 members, no problem, but that’s not where growth is going to come from.”He welcomes some of the changes promised by the government – but warns that the constraint on many credit unions is lack of capital.“External investment is going to be important,” he says.That’s where the Finance Innovation Lab and a coalition of other charities and lenders argue that legislation is needed, to force the powerful high street banks to play their part.
Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionThe government published its financial inclusion strategy last month, aimed at easing the struggle of consumers to secure affordable banking, insurance and other crucial services,But it included no specific targets, and made few firm demands of the finance sector,There was backing for a “small sum lending pilot”, led by Fair4All Finance, “to help expand access to affordable credit in England”,But the scale of the pilot was not specified – and it was unclear how it would differ from existing mutual lenders that already make small loans,Campaigners including the actor Michael Sheen, who made a TV documentary on the exorbitant cost of debt for low-paid consumers in his home town of Port Talbot, argue for a much more muscular approach of a “Fair Banking Act”.
This would be a new law, modelled on the US Community Reinvestment Act, which has been in force for almost 50 years,Under the US version, banks are ranked by regulators according to how well their services reach underserved communities – and obliged to publish strategies to show how they will improve,In many cases this then involves working with credit unions, or community development financial institutions (CDFIs) – another form of non-profit lender – hugely expanding the amount of capital these institutions have available to back new lending,The coalition promoting the idea, which includes the Finance Innovation Lab alongside a string of mutual lenders and other campaign groups, argues that if such an act were implemented in the UK, it could lead to lending by credit unions and CDFIs to jump from £250m today to up to £3bn a year,The proposal is backed among others by the Co-operative party, whose members include 41 Labour MPs, including the Treasury minister James Murray and the Treasury select committee chair, Meg Hillier.
It is a stretch to imagine the government slapping a Fair Banking Act on an industry that Rachel Reeves has called the “crown jewel in our economy”, but with the sector’s power should come responsibility.The banks escaped the windfall tax that many on the left had hoped to see in the budget, and which the Institute for Public Policy Research (IPPR) argued could raise £8bn a year.It does not seem too much to ask that, in return, they put a fraction of that sum behind supporting the local, mutual lenders that help to keep the loan sharks at bay.
Steel, courage and a sense of humour: how Lando Norris claimed his first F1 title | Giles Richards
After blows in mid-season the British driver rallied to hold off the challenge of his teammate Oscar Piastri and a stunning late run from Max Verstappen to make history in Abu Dhabi“Just want to go have a burger and go home,” was the disconsolate entreaty from Lando Norris when he felt his Formula One world championship hopes had taken a mortal blow after he failed to finish at the Dutch Grand Prix in August. Yet it was testament to the resolution he has shown all season that while down he was far from out, as he proved in going on to claim the title that he felt had slipped away.When Norris took the world championship with his third‑place finish in Abu Dhabi on Sunday he became the first British champion since Lewis Hamilton took his last title in 2020 and, similar to Hamilton for his first win in 2008, he had to show his absolute determination to close it out after a rollercoaster ride for the 26-year-old.Quite apart from what has been a gruelling test of his driving ability across a season marked by intense competition, the level of emotional and psychological control that Norris has had to demonstrate must not be underestimated.He had gone in as favourite back in Melbourne for the opening race but for great swathes of this season he has been under the cosh
Lando Norris wins F1 world title in Abu Dhabi despite Verstappen’s GP win
In tears and almost rendered speechless by the sheer weight of emotion, what winning his debut Formula One world championship meant to Lando Norris was writ large across every inch of his face. What had begun as a childhood dream and at one point this season had seemingly slipped from his grasp was, finally, a reality he clearly found hard to take in, as he sealed it with third place at the Abu Dhabi Grand Prix.It would have taken truly a heart of stone not to have been moved by it all as he secured the title after what has been an enormously hard‑fought season across 24 gruelling races that went to the wire at the Yas Marina Circuit.Despite his title rivals finishing ahead of him in the race – Red Bull’s Max Verstappen winning and his McLaren teammate Oscar Piastri taking second – Norris did enough to close it out with a gutsy, nerveless drive that gave way to untrammelled emotion as his podium place was just enough to pip Verstappen to the title by two points.“I’m not crying,” Norris said through the sobbing inside his helmet before being embraced by his equally tearful mother, Cisca, as he then tried to embrace as many of his team as he could
Ben Stokes says England have been ‘letting the pressure get to us’ in Ashes
Ben Stokes has admitted that the way England have folded in key moments during the first two Ashes Tests has led him to question the character of his players, and said: “A dressing room that I am captain of isn’t a place for weak men.”After Australia won the second Test in Brisbane by the same eight-wicket margin with which they secured the first, Stokes suggested the telling difference was that the home side had been superior in the “moments in the game where the heat is on and the pressure is really, really cooking” whereas his players “have all been guilty at moments [of] letting the pressure, the occasion, the circumstances, get to us”.“Over and over again, Australia have managed to get through those periods and outdo us,” Stokes said. “I know it’s not a skill thing, because they’re all incredibly talented players. But if you can’t put it down to skill then you start to wonder, what is it? Do we need to start thinking about what mentality we’re taking into those pressure moments?“Because when we’re on top we’re great, but when the game is neck and neck we’re not coming out on top on enough occasions to be able to challenge Australia
Alex Yee runs second fastest British marathon time to trail only Mo Farah
Alex Yee, the Olympic triathlon champion, has become the second-fastest British marathon runner in history with a stunning run in Valencia. The 27-year-old finished seventh in a strong field in a time of 2hr 6min 38sec, quicker than any Briton in history apart from Mo Farah, who ran 2:05:11 in Chicago in 2018.It was a remarkable performance, especially given Yee took up the marathon only this year as a mini-sabbatical from triathlon after he won gold in Paris. As Yee crossed the line he roared to the skies before placing his hands to his head, in disbelief at the time he had just achieved.“Valencia marathon blew away any expectations I had of myself,” said Yee
Australia v England: Ashes second Test, day four – as it happened
Righto, that is all from us today. The lights are dimmed here at Brisbane’s Gabba and the pitch is being watered by the ground staff. Australia are one win away from being home and hosed themselves.We’ll be back to OBO the third game of the series in Adelaide starting on 16th December.All Ben Stokes wants for Christmas… is a Test match win in Australia
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In the end, the only tension was whether Brisbane’s rain would descend before Australia could knock off the last 32 runs in the final session, and so whether going 2-0 up in the Ashes would be delayed until the fifth day. It turned out that England’s resistance through the light of the afternoon had only dished up some evening entertainment for home fans, with Travis Head able to put on a brief show in dispatching the pink ball over the fence before he headed back the same way.Although through the longest partnership of the series so far, 221 balls on the hottest day of the second Test, Ben Stokes and Will Jacks made Australia work in the field, something that was perhaps worth doing for the simple fact of proving that it can be done. With Mitchell Starc tiring after leading the line all series, the contest became a grind. What it reflected about Australia’s bowling makeup was instructive
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