Strategy Overview
The Scottish Government is committed to tackling the problem of financial exclusion and is working to ensure that people have access to affordable financial products and help when in financial difficulties. The Partnership Agreement details progress towards empowering people to take control of their own financial position and break free of unmanageable debt.
Debt
Last year Citizens Advice Scotland dealt with 500,000 enquiries relating to approximately £157m of debt. Over the last 10 years we have seen a shift in the type of debt people accrue. Consumer issues (including consumer debt) account for 1 in 5 of all enquiries.
Extortionate Credit
Credit is a way of life but can be more expensive for people on low incomes. Loans for small amounts are not easily available on the high street, leaving people to turn to extortionate moneylenders to pay for essentials. These lenders can provide small, short-term unsecured loans through networks of local collectors with inflated interest rates. The consequences for families and communities borrowing at such rates can be dire.
We are working with the UK Government Department of Trade and Industry, who are reviewing the Consumer Credit Act to put an end to harassment by loan sharks, introduce fairer credit schemes and new protection from unreasonable interest rates. We are representing Scottish interests.
Money Advice
The Executive provides £5m funding yearly to increase the numbers of money advisers throughout Scotland by 170, enhancing further the invaluable service they provide. We are working to introduce standards for all money advisers to work to, and certification to enable selected advisers to draw up debt repayment schemes under the new Debt Arrangement and Attachment Act (Scotland) 2002. We are developing the money advice service to help people facing multiple debts.
Credit Unions
Credit unions have an important role to play in combating financial exclusion. They provide access to loans with competitive interest rates and encourage saving, which we know is a long-term way out of money problems. Some Credit Unions also provide other financial products such as insurance and help with household budgeting.
Bank Accounts
We are continuing to work with the UK Government Treasury and Finance Sector to promote the uptake of Basic Bank Accounts.
Through the Government's " now let's talk money" campaign work is underway to raise awareness among intermediaries of the financial products and services available to consumers and, generally, to encourage the take up of bank accounts and increase awareness of affordable credit for those who are financially excluded.
Scottish Centre for Regeneration (SCR)
The Scottish Centre for Regeneration (SCR) has published a Learning Point - 'How housing associations can contribute to financial inclusion'. It identifies the issues, the importance of joining up work and involving tenants and the wider community. And looks at how housing management can have a positive impact and how housing associations can help provide financial services.