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Acevo spearheads Responsible Finance group

Finance | Tania Mason | 17 Nov 2009

Acevo is leading the formation of a Responsible Finance Coalition of civil society organisations that will lobby the government to force high street banks to lend to people in deprived areas.

The Coalition has the backing of the Community Development Finance Association, the Development Trusts Association, London Rebuilding Society, Urban Forum, Fair Finance and others. Acevo’s head of policy Ralph Michell said the hope is that others will get on board once the Coalition is officially launched.

According to Acevo chief executive Stephen Bubb, the Coalition intends to launch a campaign to lobby for a UK equivalent of the US Community Reinvestment Act.

Acevo is providing the secretariat and is in the process of appointing someone to work full-time on the campaign.

Michell said the Coalition has four broad aims – to encourage financial institutions to be more transparent about who they lend to; to encourage them to lend to underserved communities, both demographic and geographical; to lend responsibly, so as not to charge high interest or demand immediate repayments from newly disadvantaged customers, and to help reinvigorate communities by becoming more involved in local life.

Bubb said the US model had been very successful at convincing banks to relax their lending criteria in areas that had previously been lending blackspots, such as parts of Chicago and New York.

Credit for civil society organisations

As well as helping individuals to access finance, the campaign aims to free up more capital for civil society groups that currently are considered too high-risk by mainstream banks.

Earlier this year communities secretary Hazel Blears told the House of Commons that high-street banks should be forced to lend to people from poorer areas and that her department was examining US-style community reinvestment models.

At the time, the Community Development Finance Association said it wanted to see credit directed through the 70 Community Development Finance Institutions it represents, which have experience in lending to businesses and individuals in deprived areas.

“I think it’s pretty clear that the next priorities for our sector is access to capital,” Bubb said. “We want a bigger market. But lots of banks don’t have a good attitude currently to charities and other civil society groups.”

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Who's Who: Sir Stephen Bubb