Credit use by people from minority ethnic groups

Alicia Herbert

The use of consumer credit by people from minority ethnic groups is more limited than is justified by their financial circumstances, according to a recent survey by researchers at the Policy Studies Institute.

They examined the pattern of credit use among the African-Caribbean, Pakistani and Bangladeshi
communities and found that:

  • Community-based savings and loans schemes primarily meet the needs of those in low-paid work and are often inaccessible to people living on benefits.
  • Across all three communities, access to commercial credit is constrained by language difficulties, lack of knowledge of the credit industry and alleged racism.
  • The authors conclude that new legislation is not required to deal with the variety of unlicensed practices observed in the study. It requires a combination of enforcement and, above all, increased access to cheaper forms of credit both through licensed commercial lenders and community based savings and loans schemes.
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