London's schools and colleges should work with the financial services industry to make sure all young people have a bank account and a decent grasp of how to manage their money, a report by the London Assembly has said.
The report, published by the London Assembly's economy committee, found many people in the capital were struggling to access good quality, affordable financial services, despite London's status as a leading global financial centre.
The study found more than a million Londoners are in serious debt, with around a quarter of those aged between 18 and 30 saying they were in debt "all the time".
A third of all users of high-cost loans were aged between 18 and 34, the report found.
To address this, the committee has recommended create a young person’s banking charter, with the aim of ensuring all 16-18 year olds has a bank account, including a commitment from banks to provide young people with a bank account by default.
It has also called for an annual study to be commissioned, studying the financial activity of London households to get a better understanding of the city's "underbanked" communities.
The report also recommended holding a Money Advice Week to promote affordable credit and using Transport for London advertising space to promote credit unions.
Caroline Russell, a member of the London Assembly and chairman of the economy committee, said: "Many of us take it for granted that when faced with a financial shock, such as a sudden loss of income or the washing machine breaking down, we can draw on savings or borrow money on fair and affordable terms.
"But for a growing number of Londoners, the reality is that this kind of upheaval would bring them to crisis point. As real incomes continue to fall and work, for many, becomes less predictable, the idea of ‘putting something aside’ has become increasingly difficult.
"Young people are perhaps the group most deeply affected by these issues. Their lives are often defined by economic uncertainty and financial insecurity. This generation has suffered the biggest drop in real wages of any group since the financial crash and need advice and support to manage their resources effectively."
The report found evidence payday loans were being increasingly used for necessary expenses such as utilities, rent or food.
It also warned that the stigma of payday loans can result in their users being barred from accessing affordable credit in the future.
damian.fantato@ft.com
