Blog: Building Financial Inclusion Together

As the country welcomes a new government, our Deputy CEO Sarah Porretta writes about the opportunity the whole sector has to work together to tackle financial inclusion.

Everyone needs access to fair and affordable financial products to go about their daily lives, manage their money and be economically active. And yet financial exclusion affects millions of people across the UK. It’s a key barrier to opportunity, wellbeing and prosperity. 

Being excluded affects people in so many different ways. It can mean living in a postcode where it’s prohibitively expensive to insure your car – the car that you need to take a job in the next town. Perhaps you have a fluctuating income – you can’t work in the school holidays, but it’s time to buy the kids new school uniform and you just want to borrow a little bit of a money at a reasonable rate so that you can get through August, knowing your income will rise again the following month. 

These scenarios and others play out day after day in squeezed households across the country. And at a time where every penny counts for households and the public sector, the poverty premium (the extra money it costs you to live, when you are excluded from the system) is costing the country a staggering £2.8bn per year.

Fair4All Finance has long argued that financial inclusion is a key enabler for growth and resilience, and has advocated for a coordinated national effort. So we warmly welcome the new Government’s commitment to establishing a national financial inclusion strategy, backed by a Treasury Minister. This is an opportunity to build upon the Financial Inclusion Plan we developed with industry. We look forward to working together with the industry to make this new strategy a success. 

The working together part is essential. We know from speaking to industry that mainstream financial services and the community finance sector are not short of ideas for what can be done, nor lacking in motivation – but they want to work together in an environment where everyone comes to the table to play a proportionate share, with the support of government and the regulators. 

This week we are looking forward to welcoming 200 leaders from across the financial services industry to our first Building Financial Inclusion Together conference. It is designed to showcase what works and explore the collective action needed to boost inclusion. We want participants to leave empowered to take a leading role in addressing financial inclusion, with a clear sense of the actions they can take to make a difference. The conference will provide the forward momentum for the new Government to launch its renewed focus on financial inclusion. 

I’ve been working on financial inclusion and financial wellbeing for 15 years, and I am hopeful that this is the moment for real and sustainable change. We have a huge opportunity to develop a world leading financial services system that drives growth and leaves nobody behind.

If you are new to Fair4All Finance, here is a short overview of what we do.

Increasing the availability of affordable credit provision to sustainably meet customer needs

The community finance sector, and a range of other public and not for profit organisations, are doing important work to build the evidence base of what works to improve financial inclusion.

We’ve now committed £40m to community finance providers to preserve and scale affordable credit provision to over £500m by 2025. In 2023, five of our investee organisations provided £65m of affordable credit across 155,000 loans – up 26% from 2022. And our £27m deployment to CDFIs has leveraged at least £60m in social and commercial investments.

Partnering with banks and financial services providers to increase access to products and services

Banks and mainstream providers are well placed to serve more customers in financially vulnerable circumstances and support other organisations who are already doing that well.

We’re using our insights to help organisations better understand the needs of people in financially vulnerable circumstances and design solutions to meet them, with 260 organisations having accessed our customer segmentation resources. And we’ve extended our partnership with JPMorgan Chase, securing a £2.5m commitment to support our consolidation lending work.

Developing the market to consistently provide products that meet the needs of all customers

We have a strong evidence base to support policy development and to launch initiatives that make an immediate impact on people that need it the most.

4,479 people have been given a stepping stone to financial resilience through our No Interest Loan Scheme (NILS) pilot. Early indicators are positive and suggest the pilot is increasing customers’ ability to access credit, with roughly a third of borrowers going on to take out a subsequent commercial loan and the same portion of those borrowing from a credit union starting a savings habit.