At Fair4All Finance we’re working to make the financial services sector fairer for everyone. One of the ways we’re doing this is by scaling up access to fair and affordable products to better meet the needs of millions of customers across the country.

There are more than 20m people in the UK living in financially vulnerable circumstances, many of whom are excluded from mainstream financial services and struggle to access safety nets like insurance, savings and credit. At the same time, there’s an estimated £2bn unmet gap in the provision of credit.

While credit isn’t the answer for everyone, a small sum of money, lent responsibly, can help people manage life events, cover unexpected expenses and build their long-term financial resilience. But currently the supply of affordable credit for people in financially vulnerable circumstances doesn’t meet the demand.

Our Scale Up Programme is helping to change that, by investing in Community Finance Development Institutions (CDFIs) and credit unions to help them to scale up their provision of affordable credit to more people in financially vulnerable circumstances. 

Our investments are supporting community finance organisations to improve their technology, streamline processes, integrate tools like benefit calculators into their customer journeys. These improvements are key steps toward expanding access to their services and strengthening the financial resilience of the people they serve and provides strong evidence our funding deployed into motivated organisations can deliver genuinely impactful results.

£37m in social investments, grants and guarantees and growing

We’ve now committed over £37m in social investments, grants and guarantees to seven CDFIs and credit unions as part of our Scale Up Programme.

These social investments are supporting the sustainable growth of CDFIs and credit unions serving people in the most financially vulnerable circumstances across the country.

What’s clear is this support is driving real results to those that need it most. In 2024 alone our Scale Up Investees (seven leading community lenders) provided 176,000 loans totalling £107m in new affordable credit provision. This represents significant growth – a 33% like for like increase in the value of new affordable credit compared to 2023 (excluding the two new investees who were not part of the Scale Up portfolio in 2023).

Importantly, this growth was achieved while maintaining stable bad debt rates and improving profitability for the lenders, proving that responsible lending and financial sustainability go hand in hand.

Organisations in our Scale Up programme are:

• Fair Finance
• Fair for You
• Great Western Credit Union
• Lewisham Plus Credit Union
• London Mutual Credit Union
• Moneyline
• Salad Money

It’s notable that overall, our investees are outperforming the market, with a 33% growth in 2024 compared to the 6-8% growth seen in the broader unsecured credit sector. At a time when many lenders are retreating, these organisations are proving that affordable credit can scale responsibly. The majority of our investees improved their profitability last year, and maintain stable bad debt rates.

Transformative social impact

Our Scale Up Programme accounts for half of our committed capital to date and is delivering some fantastic outcomes for people in financially vulnerable circumstances.

• In 2024, 53,000 loans were issued to first time customers breaking the cycle of exclusion
• 79% of loans issued were less than or equal to £1,000, highlighting a very real need for access to smaller sum credit
• 37% of loans were issued to lone parents with dependent children, a group of people disproportionately experiencing financial vulnerability, the majority of which are women

Unlocking further investment to increase growth

At the start of this article, we talked about the £2bn in unmet credit provision in the UK. This is a huge sum, and not something any one organisation can look to close alone. Collaboration is key and we’re exploring innovative and exciting funding models to attract commercial and impact investors, including:

• Fair for You: Our £5m junior debt investment, paired with a significant senior debt facility from Shawbrook Bank, will doubled their lending capacity to support people in financially vulnerable circumstances with affordable credit
  
• Salad Money: We have provided a partial guarantee to Ceniarth, a leading impact investor, enabling a commitment of up to £2m into Salad Money. This investment by Ceniarth has catalysed significantly more lending by Salad Money.

These examples show the significance of innovative risk-bearing impact investment into community finance providers, and the catalytic impact on affordable credit provision for millions of people in vulnerable financial circumstances.

‘This funding from Shawbrook and Fair4All Finance is a crucial step forward in helping Fair for You extend its reach to even more customers who might otherwise struggle to access affordable credit. As rising costs continue to put pressure on household budgets, we remain committed to supporting such families by helping them avoid having to go without essential household items.

The impact of Fair for You lending clearly demonstrates that affordable microcredit can bring people out of hardship, help them regain control of their finances, and improve their mental and physical wellbeing.

Shawbrook’s understanding of the not-for-profit lending space together with Fair4All Finance’s commitment to the Fair for You mission will enable us to lend to even more customers and further scale our social impact.’

Simon Dukes, CEO of Fair for You

What next?

• The positive impact of our Scale Up Programme is clear to see: many more people in vulnerable financial circumstances have access to affordable credit, delivered by diverse and ambitious community finance organisations. However, the community finance sector needs more long-term investment from a range of committed partners to fully realise its growth potential to play its part in tackling financial exclusion and to better continue to improve the financial lives of the over 20m people in financially vulnerable circumstances.
• We’ve seen the positive impact that impact investors can make by investing in community finance providers to help them scale access to affordable credit – which we hope will encourage more investors to get involved
• There is an important role for government and regulators to play to accelerate the growth of affordable credit, and we’re looking forward to working alongside them on this as part of the National Financial Inclusion Committee