News that the New Local Government Network think-tank is to investigate whether councils should intervene in payday-lending, childcare, housing and energy is welcome, particularly as My Home Finance believes that more needs to be done to promote social mobility and responsible lending.
In just five years, the amount of money people have borrowed through payday lenders has boomed from £900m to £1.8bn.
It is now estimated that two million people in the UK use payday loans. The dangers and pitfalls of payday lending have been widely discussed in the media and in Parliament, but very little has been done to address the provision of responsible credit for those who are on low incomes, and already in difficult financial circumstances.
Whilst Credit Unions provide a solution for many who cannot access finance from high street banks, they are often unable to serve those in greatest need.
Vulnerable individuals are therefore forced into taking out loans at exceptionally high interest rates either online or on their own doorstep.
My Home Finance helps people who struggle to get loans and who may have a poor credit history. As a social enterprise we are able to work with the most marginalised and those in greatest financial need by lending to them responsibly and at affordable rates.
The cycle of debt and dependency on borrowing can easily escalate – with the effects infiltrating all aspects of peoples' lives. If lenders were more diligent and thorough in ensuring that their customers can afford to take out a loan, a huge proportion of tomorrow's bad debt problems could be avoided.
Responsible lending can have a profoundly positive impact on a person's life; showing them that there is a way to borrow whilst still being in control of their finances.
Access to fast loans is not going to disappear, but if there were a greater understanding of why the need is there and what the benefits of responsible lending are, then there could be a vast improvement in economic and social wellbeing for millions across the UK.
Tess Pendle is head of My Home Finance
