The government must do much more to increase access to affordable credit for people on low incomes, MPs said in a report today.
The Treasury select committee called for the Department for Work and Pensions to review the Social Fund’s role in promoting financial inclusion, finding it was failing to assist those most in need of credit.
It also called on the government to provide longer-term funding and greater support for credit unions and other third-sector lenders, and to legislate to reduce their operational costs and increase their ability to raise capital.
The committee also called for a higher priority on enforcement action against illegal lenders.
The report said: “Financial exclusion blights the lives of many millions of people; it increases the costs they bear for basic services; it makes them vulnerable to illegal or high-cost lending; it reinforces social exclusion.”