Govt 'must act' on expensive loans

An influential group of MPs has called on the government to do more to tackle expensive lenders and loan sharks.

More must also be done to improve access to affordable credit and to promote savings, the House of Commons Treasury select committee said today.

"The government needs to spearhead action to tackle high-cost credit, galvanising enforcement action against illegal lenders, monitoring the effectiveness of measures to ensure increased competition in the home credit market and actively promoting improved data-sharing among and for lenders," the committee said in its report on financial inclusion.

"The government must act soon to release the potential of third sector lenders - credit unions and community development finance institutions - to provide lending."

The committee added that measures to help credit unions raise money and cut their costs should be put in legislation, and that the government's social fund "must become a more effective lender to the poorest members of society".

Turning to savings, the report said the UK has not served those lower down the income scale properly.

"Even a small cushion of savings can make a great deal of difference to the personal finances of those on lower incomes," the report states.

Additionally, there should be more done to help those on low incomes to access good financial advice.

"Generic financial advice which is not tied to a sales process for particular products would represent a key building block in an effective financial inclusion strategy.

"The provision of such advice on a more systematic basis is in the interests of the financial services industry and all consumers." XXX