Banks must do more to help former prisoners access financial services to keep re-offending rates down, a report said today
Exclusion from bank accounts, insurance and affordable credit is preventing many former offenders from getting into work and securing a home, while it is also forcing their families into debt, according to the Prison Reform Trust and reformed offenders group Unlock.
The Ministry of Justice has highlighted the fact that stable employment and housing are the most important factors in reducing the risk of people reoffending.
But the groups pointed out that it was difficult to achieve either of these things without access to basic financial services.
Chris Bath, director of projects at Unlock and co-author of the report, said: ''Financial services are a crucial foundation for engagement in modern society.
''If we want people to lead productive lives, working, paying taxes and providing their family with a home, we cannot allow the justice system to sever people from their finances, even less to create lifelong financial exclusion.''
The research found that a third of people in prison did not have a bank account, and more than half had been rejected for a loan. Four out of five people had also had problems getting insurance.
People in prison were also 10 times more likely to have borrowed money from a loan shark than the average British household.
The report warned that this reliance on loan sharks was likely to drive up crime, as people took desperate measures to avoid the often violent techniques used by unlicensed money lenders.
One person told researchers that the reason he was in prison was because he needed to get money to pay off his bills. He said he had been rejected by banks and felt he had already asked his mother for too much.
Nearly two-thirds of prisoners said they had struggled to pay bills or were in real financial difficulties before they went to prison.
More than half of families also said they had taken on debt since their relative had been convicted.
The report said that rather than tackling these issues, the justice system was exacerbating financial exclusion.
It said 64 per cent of former prisoners thought their debts had worsened during their sentence, but three-quarters said they had never been asked about their finances.
The groups are calling for people to be able to open a bank account and receive lessons in handling money before they leave prison. People should also be able to manage their bank accounts while they are in prison.
Prisoners should also have the opportunity to earn a real wage, enabling them to save money, support their family or reduce debt. They should pay tax and National Insurance on the money.
The groups would also like the insurance industry to lift its blanket ban on offering cover to people with convictions, while the credit industry should also develop ways of treating people who have been in prison more fairly.
Juliet Lyon, director of the Prison Reform Trust, said: ''Far too often people leave prison only to face a second sentence of no insurance or banking, mountainous debt, loan sharks circling and a family to provide for.
''The rehabilitation revolution stands or falls on banks, insurers, public agencies and government working together to allow people to take financial responsibility for themselves.''
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