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The Government’s u-turn decision to cap payday loans this week has been welcomed by many charities and campaigning organisations, not least by our very own Community Investment Coalition (CIC).

One of the main reasons CDF is involved in the CIC campaign is because it aligns with our mission-led objective of ensuring that all communities have fair access to resources. In real terms, we are striving to ensure that people living in economically challenged circumstances are not unfairly penalised by the absence of mainstream credit providers, where they are often instead pushed towards using high-cost credit to fund their daily activities. You don’t need me to tell you about the damaging effect that this debt can have on people’s quality of life.

But here at CDF, we’re coming across a number of examples of where community-focused organisations – including housing associations – are coming together to tackle debt (and it’s causes) in their local communities. Below are a few examples of the fantastic work they are doing and you can find the full case studies on our website.

Housing associations taking on the payday lenders

We’ve seen some of the members of the PlaceShapers network, which connects over 100 housing associations across England and Wales, taking on the payday lenders themselves.

Take the Northern Housing Consortium which has taken on the “Buy now, pay later” companies by launching, where tenants can buy essentials at massively discounted prices. Through the site they can also access socially responsible finance through credit unions and CDFIs.

And the Shoreline Housing partnership in North East Lincolnshire, which will soon offer a Credit Union-based Bill Paying Account to tenants who need access to affordable credit. Tenants can elect to have their benefits paid directly into the managed account; payments will then be paid out to utilities, landlord, insurances etc. and surplus funds can be loaded onto a pre-paid debit card or paid into an account of the tenant’s choice.

Volunteer-run debt advice community organisations

Our Community First programme analysis also shows that a number of funded projects are providing advice and support to people in debt. One such organisation is Harlesden Money Advice (HMA) in North West London, which received two £2,000 Community First grants. The money has been used to help with the running costs of their free and impartial debt advice service, run entirely by volunteers.

The volunteer advisers help people in the local community who have found themselves in debt. Often people whose life changed after they lost their job and couldn’t keep up with payments. People like Jess.

Jess was diagnosed with a long-term illness in 2008, meaning she lost her regular income, spiralling her and her daughter into a life of debt. One day she turned to HMA, with several plastic carrier bags full of creditors’ letters in tow. She needed to make sense of the £16,000 worth of debt she had accrued so she could escape the constant fear of bailiffs knocking on her door.

After the community project’s advisers took the time to sort through the letters and negotiated realistic payment plans with the creditors, Jess no longer receives aggressive calls, nor does she live in fear of the bailiffs knocking. Her debts are now manageable and she feels in control of her life again.

About the CIC campaign

So far the CIC campaign has focused on pressing for new legislation and changes to existing legislation to make sure that the development of alternative financial supply has a fair chance of succeeding. We have made good headway – look out for further news on the voluntary disclosure of lending data by the main banks towards the end of this year. But we know, too, that whilst demand for fair credit continues to soar, the supply remains limited and ad hoc. As is so often the case, community-based organisations move in to respond to market failure.

We want to use these inspiring examples to demonstrate the potential of locally-based solutions, in the hope that we can achieve national support for structural and systemic change (and investment). If we can influence who provides fair and accessible financial services and support, where it is needed and when it is needed, we might then begin to see the reversal of this frightening trend in debt and all of the associated damage this causes to people in our society.

Full case studies can be viewed on the Community Investment Coalition page.

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