Poor need more help with loans

A financial institution working to protect the poorest in society? Miracles will never cease!

Well, given that the Financial Conduct Authority is meant to regulate moneylending organisations, such protection for the poorest in society ought to be a given. Unfortunately, this has not always appeared to be the case, particularly in the rent-to-own sector.

This is where people can buy things like domestic appliances with a series of small payments over a considerable length of time.

A good idea in principle, but one which can see families paying more than £1,500 for goods that can be bought for £300 on the high street. If it falls within a family’s means, then all well and good. But for many, particularly those on very low incomes, it can result in mounting debts and, with that, more stress, more financial worries and, in some extreme cases, the break up of the family, court appearances and suicide.

After nearly two years of study into borrowing at high interest rates, the FCA has outlined a package of plans for the rent-to-own sector, doorstep lenders and catalogue shopping.

It is, as FCA chief executive Andrew Bailey has stressed, a “rebalancing in the favour of the customer.”

Given reports that three million UK households are paying more than 25% of their income to creditors, there is still plenty of rebalancing to take place.

A cap is to be placed on rent-to-own prices by the FCA which ought to ease some of the pressure, but they held back on hopedfor proposals to impose price caps on overdrafts.

A society should be judged on how well it cares for its most vulnerable. When it comes to financial protection, we are, too often, found wanting.