Islwyn MP Chris Evans has called for new laws to tackle the growing problem of financial exclusion.
A Ten Minute Rule Bill tabled by Mr Evans aims to ensure that banks are held accountable for their lending activities.
Here he sets out his argument for the new law.
It has been in vogue of late by all political parties to bash the banks. While nearly everyone has been quick to blame the banks for the financial collapse, very few have asked where do we go from here?
The economic conditions that have come around as a result of the collapse have caused hardship for families meaning more people are driven into financial exclusion. At the same time banks have become more reluctant to lend and give credit.
The impact of financial exclusion, affecting almost two million people in the UK means that essential services become more expensive. This can take the form of paying for utilities without direct debit, or a house repair that can cause temporary financial difficulty meaning people have to use the services of predatory and very expensive credit companies.
At present there are nine million people in the UK who do not have access to credit from banks, so the time is now right to ensure that our financial institutions recognise their obligation to wider society.
The financial sector must understand the responsibility they have to the people whose jobs and way of life they put at risk by the reckless practices they pursued prior to the financial crash of 2008.
For me, one of the primary co-operative principles should be that all people, regardless of their background, have equal access to routine affordable financial services and credit. In short, it is time that banks starting serving society rather than the other way round.
It is for this reason that I have decided to introduce the Banking Disclosure and Responsibility Bill in Parliament.
The bill would require banks to produce a report specifying who they are lending to. The aim of this would be to find out about those who are excluded from financial products from mainstream banks and ensure that everyone can have access to affordable banking services.
Banks would then be assigned ‘social performance ratings’ which would also take account of a range of factors such as branch presence in deprived communities, take up on basic bank accounts as well as environmental factors and community projects. This would address the problems of branches closing in rural and remote communities.
The Bill would also ensure that all information on financial transactions be recorded by banks. This would give an insight into the state of the market and make clear any warning signs that could predict any future economic crash. Therefore, in future any problems in our system could be identified early and appropriate action taken.
Ultimately, the Banking Disclosure and Responsibility Bill is an opportunity to build trust in our banks, allow them to take a lead in the battle against financial exclusion and reduce the risk of another financial collapse.
Christopher Evans
Labour MP for Islwyn