Financial advice and inclusion
137. Whilst irresponsible lending must be tackled,
there is clearly also a responsibility on the individual only
to borrow money that they can afford to pay back. Here, the issues
of financial inclusion and literacy are key. 37% of people in
Scotland have no savings and 11% of Scots do not have a bank account—a
figure that rises to 18% amongst those with low incomes.
138. Even for those with bank accounts, access to
banking facilities, including free ATMs, is an issue in areas
of disadvantage and particularly in rural communities. ATM charges
can often amount to a significant percentage of the money that
is withdrawn, particularly for those on low incomes. Ms Susan
McPhee, Head of Social Policy and Public Affairs, Citizens Advice
Scotland, said:
what we found through an online survey was that 25
per cent were use pay-charging cash machines once a week. People
on benefits, for instance, who may be only taking out a withdrawal
of £10 are paying £1.50 at a time. We found that there
were what we call "free ATM deserts", areas of deprivation
which simply have no free machines at all. If people want to go
to a free ATM they have to get a bus ride, all of which will cost
them more money to get there.[162]
139. The Government have told us that access to banking,
affordable credit and face-to-face money advice are priorities.[163]
Caroline Flint MP said:
Part of it again is what we have been looking at,
the financial inclusion agenda, how we can also within the culture
of benefits encourage people to actually take more responsibility
for their finances. […] For example, local housing allowances,
where we are looking at actually giving to people in the private
rented sector the actual allowance for their housing, which is
about getting them to engage that this is a sum of money and they
then have a relationship with the landlord. Again, it is trying
to think of ways about how we develop the financial responsibilities
of families who often maybe never see much money because a lot
of things are paid off elsewhere on their behalf or by agencies,
provide the sort of support in the form of credit unions, but
I have to say—I
hope we are in agreement on this—in
the private, commercial financial sector, how they could play
a role as well with people on low incomes to encourage them to
have bank accounts and what have you.[164]
140. Stewart Maxwell MSP told us that the Scottish
Executive's policies focused on advice and education:
We have invested a large amount of money in terms
of Money Advice and, in fact, the current figures which are from
a report carried out in July 2006 showed that government was funding
130 full time equivalent Money Advice posts, which is around half
of all the advice posts in Scotland. That is one thing we are
doing. The other thing we are doing is making sure that the Curriculum
for Excellence which comes in 2008 09 will have Money Advice as
part of the curriculum to try and help many of our young people
to understand how to deal with and tackle their financial situation.[165]
141. In 2000, our predecessors recommended that more
money advice centres should be established in Scotland's poorest
communities, along with a telephone advice line. Progress on these
recommendations appears to have been slow.[166]
142. Our evidence leads us to conclude that more
action on irresponsible lending is necessary. Lenders must be
obliged to offer credit responsibly and above all transparently.
This is not the only solution. Once again, in order to tackle
the problem of debt, a coherent strategy must be implemented across
a range of policy areas, from the regulation of credit agencies
to better education in financial literacy. Co-ordinated action
will be needed on the part of the UK Government, the Scottish
Executive and local authorities to ensure this takes place.
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