Setting out our proposals

Our proposals offer a solution to the real anger and frustration that people feel about the banking system that has taken us into a recession. We have four specific proposals that, when combined, will provide the necessary changes to the way financial services are regulated to support, rather than hinder, our efforts to tackle the causes of inequality and poverty.

1. Support for communities: banks be required to re-invest at least 1% of profits to support public benefit
Banks and financial institutions have made astronomical profits over recent years and are quickly recovering from the banking crisis to post large profits once again. In return for the insurance that the government (and taxpayers) provide to the banking system, responsible finance means reinvesting profits to support activity that is of public benefit. Financial institutions would be required to re-invest 1% of their profits back into communities in the form of grants. Local or regional panels made up of people from the banks, the third sector and local government, should be established to make decisions about the allocation of this money in the form of grants.

2. Responsible credit: making it illegal for lenders to charge as much as they like for loans
In many deprived areas the need to borrow money means a choice between a payday lender charging 300% interest or a loanshark charging 3000%. It should not be legal for predatory lenders to charge whatever rate of interest they want to. A responsible credit cap should be introduced to fix an upper legal limit for the amount of interest that can be charged for a loan.

3. Disclosure: banks must publish information to demonstrate they are serving the needs of all communities, without discrimination
Money flows into financial institutions, even from poor communities - think of all the housing benefit and Job Seekers Allowance that go into bank accounts. However there is little evidence that money and banking services are equally available to deprived communities - many poorer neighbourhoods have no access to an ATM and are regularly charged more for the same service as affluent customers. Banks and financial institutions should be required to publish information on where their money comes from and where it goes to (by neighbourhood - based on 'Super Output Areas'). Disclosure would also require information to be published on how services - loans, savings and banking facilities - are provided to different groups - for example women, ethnic minorities and disabled people. Disclosure is the foundation for responsible finance because without access to this information it's impossible to properly (and responsibly) address discrimination that exists in how financial services are provided.

4. Investment - banks must take steps to eliminate any discrimination in how they provide financial services through a Community Reinvestment Act
Responsible financial institutions have a duty to meet the needs of all communities and any discrimination that is identified through disclosure will need to be addressed. This means access to banking facilities (an ATM, for example) as well as fair access to loans and investment for individuals and organisations. Through community reinvestment legislation (along the lines of the US Community Reinvestment Act) financial institutions will be required to ensure their services are equally available to all communities and groups. Banks can meet their responsibilities either directly, for example opening a branch or banking facilities in a deprived area, or through an intermediary, by investing in a Community Development Finance Institution or a local credit union.