Peers put forward amendments that would require the Financial Conduct Authority to promote financial services provision in deprived communities
Amendments to the Financial Services Bill that would require one of the two successors to the Financial Services Authority to promote lending to third sector organisations in deprived communities have been put forward by a group of peers.
The amendments, from Labour peer Baroness Andrews, Liberal Democrat Lord Sharkey and the Bishop of Durham, would require the Financial Conduct Authority to "promote an appropriate level of financial services provision in deprived communities". Lenders would be required to disclose the value of loans they make in these communities.
The amendment also requires the FCA, when promoting finance in these communities, to "have regard to the needs of small enterprises, third sector organisations and consumers in deprived communities".
The amendment was developed in partnership with the Community Development Finance Association, the umbrella body for community development finance institutions, which lend to social enterprises and deprived communities.
Harry Glavan, head of policy and communications at the CDFA, said the amendment would introduce many of the elements of the Community Reinvestment Bill, a piece of legislation proposed by the previous government, which would have required banks to lend a minimum amount in each community. The measure was consulted on but Labour lost power before it could become law.
A similar piece of legislation in the US led to large-scale lending through CDFIs by mainstream banks.
"Even identifying how much banks currently lend in deprived communities would be a major step forward," Glavan said. "This amendment would make them disclose that information."
Other proposed amendments to the bill, put forward by Liberal Democrats Lord Phillips of Sudbury and Baroness Kramer, would require the FCA to conduct its activities in a way that "does not inhibit the development of social investment" and "takes account of the distinctive features of social investment".
A letter to Lord Sassoon, the minister in charge of the bill in the Lords, from bodies including Social Enterprise UK, Acevo, the Charities Aid Foundation, the Charity Finance Group and the National Council for Voluntary Organisations, asks him to back the amendments, which it says are "wholly consistent with general government policy on social investment".