Poorer families 'need curbs on money lenders'

NEW legislation to regulate the activities of banks and tighten the licensing of credit companies is necessary to ensure that low-income families are not exploited, a report published today says.

Those receiving benefits often find their income inadequate to pay their bills and turn to lenders as a 'sticking plaster' for the difficulties - which only leads to a spiral of long-term debt and poverty, the National Association of Citizens' Advice Bureaux says.

The report, The Cost of Living, is based on a wide-ranging study of the problems faced by some of the 1,782,000 clients who sought advice on consumer and debt matters in the 12 months to last April.

It also found that those who get into debt which they cannot repay are often faced with additional stress and expense as creditors employ Draconian measures to recover their money.

The study paints a bleak picture of hardship endured by households on benefit as they are forced to make impossible choices in the struggle to find money to pay essential bills.

To ease the burden, the association is demanding the introduction of means-tested benefits to cover the cost of mortgage interest and water charges, and the re- organisation of the Social Fund to ensure that money reaches vulnerable members of the community.

But along with any improvements in the levels of benefits, it is vital that families are protected from the activities of lenders and the high cost of credit.

The association reports that the introduction of a code of practice, Good Banking, adopted by the industry in March this year, brought no immediate reduction in the volume of complaints against banks.

Families who turned to credit companies in an effort to bridge the gap between living costs and income often found they were forced to pay exorbitant levels of interest since they had no other means of borrowing money.

It highlights one unemployed client in north London who borrowed pounds 250 at an annual interest rate of 972.6 per cent. Trading standards officers advised that action for extortionate credit rates under the Consumer Credit Act was unlikely to succeed, leading the association to conclude that the definition should be changed.

Those unable to service such debts invariably find themselves the subject of the unwelcome attentions of unscrupulous private bailiffs who use methods to recover property which the association says is unacceptable.

Citizens' Advice Bureaux receive about 78,000 complaints each year about bailiffs, and some clients say they have been threatened to the point where they seek other credit in order to hold on to their property.

Ann Abraham, the CAB chief executive, said: 'An increasing number of our clients are finding they simply cannot make ends meet, and have no choice but to resort to credit.

'We are asking the Government to ensure that levels of benefit are adequate, that safety nets such as the Social Fund work for the people who really need them, and credit industry practices are closely controlled.'

The Cost of Living; Social Policy Section, NACAB, 115-123 Pentonville Road, London N1 9LZ; pounds 6.50

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Experienced Mechanic / Plant Fitter

£24000 - £34000 per annum: Recruitment Genius: This Lancashire based engineeri...

Recruitment Genius: Service Advisor

£16000 - £17000 per annum: Recruitment Genius: Due to expansion and growth of ...

Recruitment Genius: Service Advisor

£16000 - £17000 per annum: Recruitment Genius: Due to expansion and growth of ...

Recruitment Genius: SEO Account Manager

£26000 - £35000 per annum: Recruitment Genius: An SEO Account Manager is requi...

Day In a Page

Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

Why Mohammed Emwazi chose Isis

His friends were betrayed and killed by al-Shabaab
'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

Open letter to David Cameron

Building the walls of fortress Europe has had deadly results
Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

You don't say!

Tory candidates' election tweets not as 'spontaneous' as they appear
Mubi: Netflix for people who want to stop just watching trash

So what is Mubi?

Netflix for people who want to stop just watching trash all the time
The impossible job: how to follow Kevin Spacey?

The hardest job in theatre?

How to follow Kevin Spacey
Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders