Programmes and Funding
Enabling sector change
We are working towards a financial sector that provides products and services to everyone who needs them, in a way that is successful and sustainable. We know that by doing this we will have improved people’s wellbeing and had a positive impact on society and the economy as a whole.
Our initial focus has been on addressing the problem of access to affordable credit by providing support and funding for the community finance sector.
We are also working with banks and financial services providers to increase the provision of services to people in vulnerable circumstances and developing new products and services to address market gaps.
Transforming affordable credit
For the millions of people in the UK excluded from access to mainstream credit, fair and affordable lenders like credit unions and CDFIs provide a lifeline. We believe customers in vulnerable circumstances and financial difficulty should have access to a fair and affordable credit option when appropriate to their circumstances. This option should be available from providers who charge a reasonable price based on risk and who treat customers with fairness and support to improve their situation throughout their journey with a lender.
However the community finance sector is relatively small, customer demand is growing and other regulated options are shrinking.
Since we started in 2019, the Covid-19 pandemic and ongoing cost of living crisis have increased the number of people in vulnerable circumstances and the demand for fair and affordable credit. At the same time, the amount of legal borrowing options are dwindling as high cost credit providers struggle or exit the market altogether. The need to scale up the provision of affordable credit is more important than ever.
Five focus areas
We’ve identified five opportunity areas from our work to date
Systems change and impact
Deliver, influence and evidence impact of systemic change to society
Funding, finance and investment
Enable affordable long-term financing for providers
Operational excellence and capability
Optimise sustainable operating models for providers
Governance, leadership and talent
Building strong governance and a pipeline of transformational leaders and talent for the sector
Markets, consumer insights and product design
Enable well-designed solutions that build wellbeing to reach the people and communities we wish to serve
Our work is focused on three key areas:
Expanding the provision of affordable credit
We’re investing in community finance providers through our Affordable Credit Scale Up Programme to test and prove sustainable models that can be scaled and adopted by others and increase the overall provision of affordable credit. We’ve earmarked £35m for this work, around a third of our funding, and committed £28.9m of that so far, including £3.9m from our Covid-19 Resilience Fund.
And we’re working to help increase efficiency in the community finance sector through our Technology Investments, initially focused on improving the core loan management systems on offer.
We’re also supporting the growth of the sector with best practice tools and resources, co-created with providers on our programmes and other likeminded organisations.
Affordable Credit Scale Up Programme
This programme isn’t currently open to new applications
Launched in August 2019, our Affordable Credit Scale Up Programme is designed to provide tailored support to sustainably scale affordable credit provision as part of the wider transformation of financial services. And to help the sector develop a sustainable model for serving people in vulnerable circumstances.
It is targeted at ambitious organisations that are operationally sustainable, with a proven track record of serving customers in vulnerable circumstances without reliance on grant income.
The programme has commited £25m so far,
backing business plans projected to triple the availability of affordable credit to approximately £900m by 2025.
Organisations on the programme are given support tailored to their unique needs, informed by their own assessment of their needs and our detailed due diligence process. Our support comprises either long-term equity-like investment or debt funding, grant funding to develop organisational capacity and capability, or a mixture of all.
We initially piloted the programme with five community finance organisations – Enterprise Credit Union, Fair for You, Five Lamps, Leeds Credit Union and Moneyline. You can read more about each of them in our pilot organisation case studies.
We’ve since expanded the programme to support more lenders providing affordable credit to customers in vulnerable circumstances, including the social impact FinTech Salad and Hull and East Yorkshire Credit Union. And we have more investments in the pipeline.
Technology is a critical ingredient in financial inclusion, yet legacy technologies in the community finance sector are frustrating lenders’ desire to innovate and grow. Technologies adopted by mainstream finance have not been adapted to serve the customers we’re focused on.
We’ve earmarked £5m to invest in the core loan management systems and other market transformational technologies used by community finance providers, to stimulate a vibrant, competitive market of suppliers. We’re engaging with existing suppliers and are open to expressions of interest throughout the year. And we are collaborating with suppliers of technology to the community finance sector even where investment is not required.
Through this fund we are calling for applications that will help transform the market and we are open to early or later applications in unique circumstances on a case by case basis. Agreement to review early or late applications will be at our sole discretion and based on our assessment of fit with our objectives and potential impact.
We have plans for further technology investments in the future and would love to discuss co-funding opportunities with other impact investors.
Please email Nard@fair4allfinance.org.uk if you’d like to find out more.
Covid-19 Resilience Fund
This fund is now closed
We launched our Covid-19 Resilience Fund in April 2020, within a month of the first lockdown beginning. It was designed at speed in consultation with key stakeholders to help identify the risks of the pandemic to community finance providers and people in vulnerable circumstances.
The Fund provided £3.9m to 31 community finance organisations, who collectively lent over £138m in the last year before Covid-19 and serve 136,000 customers. The first grants were paid out within three weeks, with most grants paid within six weeks of identifying need.
An independent evaluation of our Covid-19 Resilience Fund by the Centre for Responsible Credit found:
- Our grants helped preserve c50% of lending capacity targeted at people in vulnerable circumstances
- Several indicators show that lending to customers in vulnerable circumstances recovered swiftly after an initial shock and that this lending has since been sustained
We’re pleased that our support helped the community finance sector across England to continue throughout the Covid-19 pandemic to be a lifeline for customers in vulnerable circumstances:
- ‘We have found many people unable to get credit because of reduced income (furlough or job loss). Often the sum needed is small and we are now able to help.’
- ‘Our loans have helped customers…. throughout Covid. We have helped members buy technology for home schooling, pay essential bills, white goods (more home cooking), financial hardship, moving costs and sadly funeral expenses to name a few reasons’
Quotes from customers
- ‘The shopping card helped me when I was struggling to feed my family during covid.’
- ‘I have to say these guys are amazing…due to Covid and not being able to work (as my son has to isolate) the credit union did their best to help me in every way they possibly could … couldn’t be more grateful… thank you
Partnering with banks and financial services providers to increase provision of services
Major retail banks play an important role in a functioning market, but right now they don’t serve all customers in vulnerable circumstances. While many have invested in financial education, provision of basic bank accounts and support for existing customers falling into financial difficulty, much more is needed to meet the significant market and customer needs.
We’re working with banks and mainstream providers to deliver affordable funding to help community finance lenders access the capital needed to grow their loan books.
And we’re building evidence and understanding of the role financial institutions can play in serving customers in vulnerable circumstances well and the difference this makes. This includes establishing best practice in measuring financial inclusion activity and research into banking practices during Covid-19 and how ethnicity influences access to financial products and services in the UK
Developing new products and services to address market gaps
The general lack of investment in serving customers in vulnerable circumstances means there’s relatively little innovation in product and market development to ensure current and evolving needs are met.
We want to ensure that the right products and services are developed for this customer group and there are systems in place to support ongoing growth. So we’re working with partners to design, pilot and scale affordable and inclusive financial solutions specifically for people in vulnerable circumstances.
We’ve teamed up with Fair By Design and Toynbee Hall to deliver a UK wide No Interest Loan Scheme (NILS) pilot with funding from HM Treasury and JPMorgan Chase, and lending capital from each of the devolved administrations.
We’ll also work with providers on other product pilots, including solutions aimed at tackling problem debt, reducing appliance poverty and increasing resilience, including through savings and insurance products.
If you are interested in developing new products and services for these customer groups please email firstname.lastname@example.org
No Interest Loan Scheme
We’re delivering a UK wide No Interest Loan Scheme (NILS) pilot with Fair By Design and Toynbee Hall, the first of its scale across the UK.
By offering a way to spread essential or emergency costs, NILS loans will provide a vital financial cushion for people unable to access or afford existing forms of credit, but who can afford to repay small sums.
The scheme will work with credit unions, Community Development Finance Institutions (CDFIs) and other regulated not for profit lenders who will help administer the loans across communities. Partnerships with local councils, housing associations and charities are also key to helping serve more people.
In 2021 we secured £3.8m in funding from HM Treasury, matched in England by us, and up to £1m of lending capital from each of Wales, Scotland and Northern Ireland. And in 2022 JPMorgan Chase committed £1.2m to expand the number of people the pilot can reach and enable testing of financial coaching support for NILS customers.
The scheme kicked off at the end of 2021 with proof of concept loans delivered by South Manchester Credit Union, with lending due to start on the full pilot in September 2022.
Theory of Change
Our Affordable Credit Theory of Change has been developed alongside the Esmèe Fairbairn Foundation in consultation with the community finance and financial inclusion sectors. It is intended to be a shared Theory of Change for every organisation that is contributing to solving the problem of a subscale provision of affordable credit in the UK. Fair4All Finance will work on part of this and in collaboration with others to drive systemic change.
We are committed to pursuing other innovations that meet the needs of people in vulnerable circumstances and in addition to our work on affordable credit we will be launching programmes on insurance and savings. Solutions could potentially include:
Supporting insurance initiatives that protect against income shocks or increase the scale of home contents cover
Developing programmes and interventions that encourage savings behaviour
Future opportunities will be added to this page and shared widely on social media.
If you’ve got a bold idea that you think we should be exploring, please connect with our team.
We are keen that our work adds to other great work that is already happening in this space and are committed to working collaboratively. From small community finance providers to major mainstream players, we’re here to work with the whole financial services sector to sustainably serve customers in vulnerable circumstances.
Government and financial inclusion regulatorsGovernment and financial inclusion regulators
Government and financial inclusion regulatorsOver three million people use high-cost credit in the UK. However, there are affordable options available from credit unions and CDFIs who are committed to helping their communities. We will help these organisations serve more customers in a fair and affordable way, by developing their capacity and raising awareness of their services with groups who may need them.
Financial inclusion advocates & researchersFinancial inclusion advocates & researchers
Financial inclusion advocates & researchersWe will collaborate to support the changes needed in society to deliver healthy credit for all and an effective safety net for those individuals who need it
Financial guidance and debt advice providersFinancial guidance and debt advice providers
Financial guidance and debt advice providersWe want to work with organisations who are supporting vulnerable people and support them to deliver services which improve financial management skills and encourage savings behaviour. We also plan to work with this sector to help build local eco-systems that help customers navigate debt advice and access affordable loans
Affordable credit providersAffordable credit providers
Affordable credit providersWe believe customers in vulnerable circumstances and financial difficulty should have access to a fair and affordable credit option when appropriate to their circumstances. This option should be available from providers who charge a reasonable price based on risk and who treat customers with fairness and support to improve their situation throughout their journey with a lender. Responsible lending makes up only a fraction of short-term lending in the UK. Each year, affordable credit providers make just £250m of loans, while over the same period, high-cost short-term credit providers lend £3bn, more than ten times as much. Our challenge is to grow the sector to meet this demand – we call this a “10x challenge”. Our scale-up programme is part of our approach to work with affordable credit providers to help them meet this scale.
Credit reference agenciesCredit reference agencies
Credit reference agenciesWe intend to work with credit reference agencies to help make credit scoring fairer and ensure it gives a more realistic profile of individuals
Commercial lendersCommercial lenders
Commercial lendersWe will work with commercial lenders to explore how they, along with Fair4All Finance, can support vulnerable customers
Housing associationsHousing associations
Housing associationsOne of the ways we hope to address the problem of access to affordable credit is by helping to provide alternatives to credit, such as provision of white-goods and furniture rental, which we invision delivering through partnerships with Housing Associations and social enterprises. We also recognise housing associations as excellent routes to market for affordable credit providers
EmployersWe plan to explore the possibility of providing low-cost employee loans via employers
Technology for good providersTechnology for good providers
Technology for good providersWe are interested in collaborating with providers of technology who could facilitate low-cost employee loan distribution. We are keen to explore how technology could transform credit scoring
Insurance industryInsurance industry
Insurance industryWe plan to work with insurers to develop new affordable insurance initiatives, which protect against income shocks or increase the scale of home contents cover among low income groups