Michael Sheen backs calls for Fair Banking Act in new documentary

Actor Michael Sheen has backed calls for the government to pass a Fair Banking Act to help tackle unaffordable credit and problem debt, in a new Channel 4 documentary.

‘Michael Sheen’s Secret Million Pound Giveaway’ set to air on Monday (10 March) sees the actor from Port Talbot use his own money to buy £1m of debt from hundreds of people in Wales, and then he writes it all off.

He has joined the Fair Banking for All Campaign to call on the government to pass a new Fair Banking Act.

Campaigners say this would help create alternatives for people who are turning to payday loans or loan sharks because they cannot get a loan from a high street bank.

On the back of the documentary, Kay Polley from the Fair Banking for All Campaign is calling on UK government to take action.

Crisis

She said: “Michael Sheen has shown in the documentary that the UK is in a credit crisis, and that the government has the power to take action on it.

“A Fair Banking Act would help the huge numbers of people who are trapped in cycles of debt with loan sharks and high-cost lenders, whilst at the same time driving capital to thousands of small businesses, fueling the shared economic growth that the government is aiming to achieve.

“Credit isn’t a solution to poverty, but it can be a vital lifeline for people needing relatively small short-term loans, preventing difficult situations escalating into real crises.”

The legislation would push high street banks to provide more affordable credit to people on low incomes and to small businesses, or to support community-based credit providers such as credit unions and CDFIs (Community Development Finance Institutions) to do so.

Declined

Recent research showed that a Fair Banking Act could lead to a thirteen-fold increase in the level of annual lending by responsible credit providers from an estimated £250m per year to a £3.3bn per year.

In 2022 – 2023, more than 9 million people across the UK were declined for credit, with millions relying on pay-day lenders often termed the “poverty premium”.

Businesses can also struggle to access the funds they need to start up or grow, hampering economic growth.

Michael Sheen recently spoke at an event in the UK parliament, which focused on the campaign for a Fair Banking Act.

He said: “Anyone can find themselves in a place where they need credit to make ends meet or to get through a difficult time.

“The lack of affordable credit for people on lower-incomes is harming individuals and families, but also businesses and communities. Whole regions are seeing their growth held back.

“We can’t keep waiting and hoping that things will get better. We need something to change now. The Fair Banking Act could be the thing which really makes the difference.”

Report

Many small businesses report that a lack of access to affordable loans is the single biggest barrier to them building and investing in their business.

This is a particular issue in more deprived parts of the UK.

Turned down

Sian from Llandelio wanted to start her own craft business.  She applied for a loan from the highstreet bank where she was a customer, but was turned down.

She then contacted CDFI Purple Shoots, who sat down with her to discuss her business plan, and were able to offer her a small start-up loan.

Sian said: “As a single mum, living in community housing, a carer and battling dyslexia and without a posh accent, banks don’t make it easy, or look favourably on you even when you are doing well.

“When I applied for a Covid Bounce Back loan, the bank was really dismissive of my expected turnover.  But the staff had not even really looked at the application and made assumptions about what I’d be selling and where.

“Even now with two limited companies operating out of two sites, with seven people engaged, getting any credibility from a bank is really difficult.

“If it wasn’t for schemes like Purple Shoots who invest and support not only the business but also the person, I don’t know where I’d be.

“Whilst your request is assessed, it isn’t in a judgemental, stigmatised or condescending way like the mainstream funders, instead they realise that everyone has a past but it’s where you are now that matters.”

99% of businesses supported by CDFIs in 2023 had already been declined by another lender, yet they went on to create and safeguard more than 12,000 jobs.

89% of CDFI lending was to businesses outside of London, with a much higher proportion of lending going to businesses which are ethnic-minority led, woman led, or based in areas of high deprivation than compared to lending from mainstream banking.