Debate 4

The issue of the “poverty premium”, the additional amount that low-income consumers have to pay for financial services, is not a recent phenomenon. However, the financial crisis and concerns over high levels of indebtedness and sub-prime financial services has brought this issue back to the fore. As the recession bites, the reduced availability of mainstream credit seems likely to result in an increasing number of low-income consumers having to resort to using higher-cost types of credit.

The economic crisis has necessitated a complete overhaul of the financial system and has prompted discussion about ‘socially useless’ banks. The aim of this seminar to explore why there is apparent market failure in relation to the services provided by banks and mainstream financial institutions to low income consumers and whether it is possible for banks and other financial institutions to provide services that accommodate the requirements of low-income consumers.

Download Brian Pomeroy CBE's paper.

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