Three Jewish community organisations have reacted with horror at Britain’s high-street banks continuing to hike the rates they charge on loans and overdrafts up to 40 percent.
Jewish charities advising those in financial difficulty echoed the concerns of Jewish charities supporting small start-up businesses and Jewish employment centres helping those affected by the wave of redundancies in recent weeks.
Last week HSBC increased its overdraft rates to 39.9 percent, up from 9.9 percent, while also introducing a £300 buffer. First Direct and M&S Bank also put their rates up to 39.9 percent, with Lloyds and Halifax set to follow suit. Nationwide and Natwest had already started charging 39.9 and 39.5 percent respectively.
The profiteering comes amid unprecedented economic hardship Covid-19 has brought to the world economy, and despite the Bank of England reducing national interest rates to just 0.1 percent last week, an historic low.
Among the organisations voicing their disquiet was Paperweight, the community’s citizen advice service, whose co-founder Benjamin Conway said it was “really the wrong time to have an interest hike”.
He added: “We know from our work that so many people are already suffering significant financial stress from the impact of the coronavirus and many are losing their jobs. It is really insensitive for the banks to continue with this.”
At Work Avenue in Finchley, business adviser Hannah Mindel said it was “a cynical move… This is a time when businesses see the true colour of the bank they currently use and consider moving their money to those banks that are actively seeking business clients.”
At Resource, which also supports new business and helps people find employment, chief executive Victoria Sterman said the organisation was “seeing the effects of the pandemic on the current job market first-hand”.
She said: “Many of our alumni have been in jobs for less than two years [the point of legal protection from unfair dismissal], redundancies are being made, probation periods not extended, contracts terminated and recruitment generally being put on-hold. Any increase in interest rates will clearly hit this already very fragile population extremely hard.”
In the last two weeks stock markets have lost 35 percent of their value, credit markets have frozen and policy makers are bracing for a drop in second quarter GDP of up to 30 percent.
In the UK, the Government last week said it would pay 80 percent of salaries, initiate cash flow support for large firms and introduce a new lending programme for smaller firms, alongside offering VAT deferral. This week it told banks “to ensure that the benefits of [those measures] are passed through to businesses and consumers”.