Julian Knight: Dante was too nice to the likes of Cattles

The banks should be forced to serve the poor

Iam not sure what to make of the continuing crisis at the doorstep-lending giant Cattles. It's playing out as yet another financial morality tale for our age. The lender, which has now suspended several board members, is sitting on a huge pile of useless loans just at a time when the economy goes from bad to worse. The situation is so bad that top accountancy firms have been called in to pick over the bones of the operation and see what is salvageable from its giant loan book.

In the normal course of events, I couldn't give two hoots about Cattles and its ilk. Doorstep lenders make their money from short-term loans at huge rates of interest to the poor in our society. Basically, they go where the banks don't and charge a whopping premium, some firms use local agents who are particularly active at Christmas. I grew up in an area where doorstep lenders operated and during my time at the BBC I met a lot of their customers, their stories achingly similar. They get behind with a relatively small bill or feel pressured at Christmas to buy the kids presents (a huge proportion of customers are single mums as they have a regular source of benefits from which to pay interest), and they are encouraged, normally by a friend or neighbour, to take out a small loan. Repayments are spread over many weeks, yet the rate of interest is huge (often well over 100 per cent) and, should they show signs of clearing the debt, they are invariably tempted by so-called rollover loans – put simply, more money at an extortionate rate of interest. The result is a life of indebtedness and a narrowing of opportunity, but it's all good business for the doorstep firms.

All this means I rank the doorstep lenders with the IVA (individual voluntary arrangement) providers and no-win, no-fee ambulance chasers, in the icy ninth circle of Hell (though Dante, more lenient than I, consigned them to the seventh, sitting in a desert of flaming sand).

However, in the post-credit-crunch world, the banks are even less likely to want to touch the poor as customers. So if the doorstep lenders go pop what will replace them? The answer will inevitably be the loan sharks, who are simply a total shower.

What should be done? Forget a bail-out, but the nationalised banks should be made to take their place. OK, they don't have to loan lots of cash to people who can't afford to borrow but they should be setting up standard banking services in deprived areas, as well as offering intense support for the sadly all too amateurish credit-union sector.

Banks have for years been dragging their feet over offering current accounts to poorer people. Branch staff have been hiding behind our ludicrous money-laundering rules in order to put off some people – those less likely to have a driver's licence or utility bill as proof of identity – opening an account. Now, as the recession deepens, this needs to change.

Remember, in times like these it's those at the bottom of the heap who suffer the most.