I've run a few articles on the website about the increasingly immoral cost of banking and the rise of unscrupulous pay day loan shops. The other thing that needs to be done over and above the recent changes to mortgage eligibility and the implementation of the Vickers report is to make banks and other credit companies pay for the cost of the advice that is needed to sort out peoples problems caused by them.
First of all, a declaration. As a CAB manager, I manage a team of dedicated debt advisers who help hundreds of people manage their debt problems every year. They are currently funded by a government programme known as the Face to Face debt programme. It costs the government £27m a year to run. The government also pays a substantial sum every year to lawyers and debt counselling charities through legal aid for debt advice. Now there is no doubt in my mind that this work is essential. The social costs of not helping these people far exceeds the costs the government puts in. But why should the taxpayer pay to help people get out of a mess caused by people being given credit they usually can't afford?
If you have a complaint about a bank, you go to the Financial Ombudsman Service (FOS). If you do that the bank you are complaining about has to pay a fixed fee to the FOS to sort your complaint out. Instead of making the taxpayer pay for independent debt advice, why are we not asking the banks to pay a levy instead?
In February the Treasury said that "The Government intends to put the provision of debt advice onto a more sustainable footing. We want to see a flexible and cost effective response to debt problems, so that people can be helped in a way that works for them. The Coalition Agreement pledged that the Government would take action to help people to manage their own debts. It has been looking for new ways to encourage debtors to seek this support in its call for evidence on consumer credit and insolvency." Since then there has been silence. A levy on the banks would be a sustainable footing as it would stop charities such as mine going to the government with a begging bowl every year.