Member Article

Sheffield partner organisations propose new financial organisation to tackle pay-day loans

Sheffield Executive Board has today announced their intention to tackle the non-standard (high cost) credit market head on, with a raft of measures designed to help give people an alternative option.

Partner organisations in Sheffield are proposing to create a new socially responsible financial organisation for Sheffield. This will comprise a Credit Union, Community Development Finance Institution (CDFI), White Goods Provider and Advice Service, all united under a single brand and strategic business plan.

This will provide services including savings accounts, budgeting accounts, a range of loan products and access to high quality white goods.

Research commissioned by Sheffield Executive Board suggests that there are around 50kpeople using the high cost credit market in Sheffield.

These people may be accessing a range of products, like pay-day loans, door-step lending, rent-to-buy agreements and log-book lending, and have an average debt of £800.

Cllr Julie Dore, Leader of Sheffield City Council and chair of Sheffield Executive Board said: “The impact of welfare reform continues to bite, with resulting impacts on the income of Sheffield residents, causing many people to turn to high cost lending. It is vital that we have a coordinated city-wide response to this issue.

“For too long payday and doorstep lenders have been able to exploit some of the most vulnerable people in our city, by preying on their need for available credit and ripping off people with extortionate rates of interest.”

Martin Lewis, founder of MoneySavingExpert.com has expressed his support of Sheffield’s intentions to tackling this issue.

Martin Lewis said: “Sheffield needs to be applauded for a venture to try and take on payday lenders. Sadly these firms are killing high streets across the country and causing misery to many, but gradually we’ve eroded the support and help that was available, such as the Social Fund.

“What we need are innovative schemes to offer the public cost effective alternatives – while not easy to do, it’s crucial that we try. Sheffield is putting itself at the forefront of this.”

Rt. Hon. David Blunkett MP launched the original Sheffield Executive Board report looking into the issues of high cost credit in the city last year.

Speaking in Sheffield today he said: “There can be few people in Sheffield or in Britain who do not now understand that there is something deeply amiss in respect of payday loans and the impoverishment of people who are desperate to make ends meet from one week to the next.

“Literally millions of people are reliant on loans which demand eye-watering repayments, with an estimate of over 50,000 people in Sheffield alone who are being ripped off simply because they’ve taken out a loan to meet essential household bills.

“I’m so very pleased that Martin Lewis, founder of MoneySavingExpert.com and well-known to millions, has agreed to provide support in this initial launch of the concept and a rallying cry to all those of goodwill to join in this the new Sheffield venture.”

This was posted in Bdaily's Members' News section by Clare Burnett .