Kindness alleviates worst effects of credit crisis
THE five years since the start of the credit crunch have seen an
"outpouring of kindness" for those in need of help, says Christians
Against Poverty (CAP), the debt counselling charity. It reports
that its church-based centres have almost quadrupled in number
since 2007, from 56 to 205.
"The credit crunch has been good in helping people recognise the
needs of the very poorest, which were there before 2007, but are ow
more widely understood, and prompt us all to respond with what we
can do where we are," the chief executive of CAP, Matt Barlow,
said.
Thursday of last week was the fifth anniversary of the European
Central Bank's releasing of €95 billion of liquidity to prevent
borrowing costs from spiralling. CAP reports that, since then, 36
per cent more of those whom it helps say that unemployment is the
main reason for their debt crisis. Figures for July show an
unemployment rate of 8.1 per cent, equivalent to 2.58 million
people. Unemployment peaked at almost 2.7 million at the end of
2011, its highest level for 17 years.
Mr Barlow said on Monday that, in addition to unemployment, CAP
had observed a "squeezing" of the credit market, which was "in a
sense, not always a bad thing. . . Making credit easily available,
lending money without proper due diligence done - the way that
banks tore up all of their previous underwriting policies - has
been disastrous for our nation."
He expressed concern about the rise of pay-day loans, under
which small amounts of money are lent at a high rate of interest,
and where approval can be given online "within seconds".
The Government has responded to concerns about such loans by
giving the Office of Fair Trading power to put an immediate stop to
the operations of rogue money-lenders, debt collectors, and
debt-advice firms, and also by working with trade bodies to produce
a new code of practice.
It has, however, opposed calls, including those from the
Department for Business Innovation and Skills, to take further
action. The consumer organisation Which? described the code of
practice as "a rebrand of many of the existing rules that have been
flouted by some unscrupulous lenders for years".