Cash services set to combat the loan sharks (From Worcester News)

Cash services set to combat the loan sharks

1:50pm Wednesday 1st September 2010 in

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A NEW financial services system is being launched across Worcestershire and Herefordshire to help thousands of people on lower incomes and give them a fair-priced alternative to doorstep lenders and loan sharks.

My Home Finance, the innovative partnership led by the National Housing Federation and supported by the Department for Work and Pensions, the Royal Bank of Scotland, 26 housing associations and the Wates Foundation, will offer access to affordable credit at lower rates of interest than those usually charged to people who are financially excluded.

My Home Finance – which will be one of the largest ever not-for-profit financial services providers in England – plans to open 10 branches across the West Midlands by the end of October. A branch in Hereford opened last month and one in Worcester will follow by the end of the year. After a face-to-face interview, eligible customers will be able to borrow relatively modest sums of about £500, repayable weekly. My Home Finance envisages this will help customers to buy everyday items such as school uniforms, a new washing machine, or furniture for their homes.

Federation chief executive David Orr said: “My Home Finance will provide an affordable, convenient and trusted option for people on lower incomes looking to build up their savings and borrow modest sums.

“By offering fair loans at fair prices we hope to offer an alternative to both loan sharks, who cynically prey on hard-up families, and doorstep lenders, who are all too willing to lend cash to the desperate at hugely inflated rates of interest. This ambitious not-for-profit sustainable scheme shows the determination of the housing association sector, the Government and RBS to help financially excluded consumers join the financial mainstream by saving and borrowing in a fair and responsible manner.”

The starting APR of a My Home Finance loan will be 29.9 per cent, contrasting sharply with 200 to 2,000 per cent APR - the typical range of interest rates charged by loan sharks.

It is hoped that by borrowing at less expensive rates customers will be able to pay off debts or have more money left over to spend in their local community. My Home Finance will also offer debt advice and help to open a bank account to encourage customers to build up their savings with the goal of helping people to take control of their own finances.