Paying over the odds is a reality for one in 12 households who don’t have access to a bank account, and whose only option is a loan from doorstep lenders. Some charge 500% interest on a 23-week deal – and they’re the legitimate ones.

The Housing Corporation estimates that doorstep lenders took £37 million last Christmas in excessive interest payments from some of the poorest families in the country. To counter this, it is working with more than 100 housing associations to overcome the pressures of debt, lack of money advice and poor access to savings schemes.

One well-established scheme is South Coast Money Line in Hampshire. The agency is supported by a range of housing associations including Portsmouth, Hyde, Western Challenge, Raglan and Swaythling, plus Southampton City Council and others. Half of Money Line’s customers live in social housing.

Money Line helps tenants pay off their arrears, then stick to modest loan repayments until the debt is cleared. Despite being among the poorest and most disadvantaged, Money Line customers are good at keeping up with payments – 90% of loans are repaid.

In London, the Change Initiative is producing real results, with support from the Housing Corporation and 14 housing associations. Having provided support and guidance with finances since 2004, a new programme will soon offer personal loans and advice on an outreach basis.

Financial inclusion manager Gail Biggerstaff says, “Our plans to deliver financial services on an outreach basis are truly innovative. Our experience tells us residents want a personal service. We will provide a real alternative to doorstep lenders and loan sharks, but will expect residents to be committed to repaying their loans. That’s the only way to make this kind of programme sustainable long term.”

Read the report Community access to money: housing associations leading on financial exclusion here (link to http://www.housingcorp.gov.uk/upload/pdf/Community_Access_to_Money_20060210160338.pdf)

Find out more
www.part.org.uk
www.changefinance.org.uk