The Co-operative Party
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Co-operative Member of Parliament Chris Evans MP outlines the background to his Banking Disclosure and Responsibility Bill in Parliament.
It has been in vogue of late by all political parties to bash the banks. While nearly everyone has been quick to blame the banks for the financial collapse, very few have asked where do we go from here?
The economic conditions that have come around as a result of the collapse have caused hardship for families meaning more people are driven into financial exclusion. At the same time banks have become more reluctant to lend and give credit.
The impact of financial exclusion, affecting almost two million people in the UK, means that essential services become more expensive. This can take the form of paying for utilities without direct debit, or a house repair that can cause temporary financial difficulty meaning people have to use the services of predatory and very expensive credit companies.
As the Shadow Chancellor said at the 2nd reading of the Financial Services Bill Debate:
‘The Opposition are worried that the Government are allowing the banks to go backwards on financial exclusion, with charges for basic bank accounts being increased in the case of Barclays, and with new charges on basic bank account holders using automated teller machines in RBS and Lloyds. We want to strengthen the obligation on the banks to produce a universal service for all retail banks.’
At present there are nine million people in the UK who do not have access to credit from banks, so the time is now right to ensure that our financial institutions recognise their obligation to wider society.
The financial sector must understand the responsibility they have to the people whose jobs and way of life they put at risk by the reckless practices they pursued prior to the financial crash of 2008.
My co-operative values and principles greatly influence my views and work in Westminster. It is important to me that, regardless of their background, have equal access to routine affordable financial services and credit. In short, it is time that banks starting serving society rather than the other way round.
It is for this reason that I have decided to introduce the Banking Disclosure and Responsibility Bill in Parliament.
The Bill would require banks to produce a report specifying who they are lending to. The aim of this would be to find out about those who are excluded from financial products from mainstream banks and ensure that everyone can have access to affordable banking services.
Banks would then be assigned ‘social performance ratings’ which would also take account of a range of factors such as branch presence in deprived communities, take up on basic bank accounts as well as environmental factors and community projects. This would address the problems of branches closing in rural and remote communities.
The Bill would also ensure that all information on financial transactions be recorded by the regulator. This would give a deep insight into the state of the market and make clear any warning signs that could predict any future economic crash, taking forward the proposals of my fellow Labour Co-operative MP, Chris Leslie. Therefore, in future, any problems in our system could be identified early and appropriate action taken. Chris Leslie outlined this on the TUC’s Touchstone blog.
Ultimately, the Banking Disclosure and Responsibility Bill is an opportunity to build trust in our banks, allow them to take a lead in the battle against financial exclusion and reduce the risk of another financial collapse.
Christopher Evans MP, Member of Parliament for Islwyn
Everyone should have the right to own a basic bank account no matter what their circumstances. Anything that can be done to make the banks’ business and pricing more transparent is welcomed too. Leicester is lucky as it has a well respected credit union to fill the gaps left by the banks. What provision or allowance does this bill make for the continuing investment into credit unions by the government to help them become a realistic alternative to the banks?
Thanks Jo. This Bill doesn’t seek to do everything that is needed to reform the financial sector and support financial mutuals. But our wider work including our recent amendments to the Financial Services Bill, questions in Parliament and the efforts of Welsh Assembly members do address that issue and others.
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