Consolidation loans pilot – call for Expressions of Interest from credit unions and community lenders

Fair4All Finance are seeking Expressions of Interest from credit unions interested in delivering more consolidation loans as a pilot. We are launching a new £3.5m consolidation loans partial bad debt guarantee fund to enable lenders to support those currently outside their risk appetite.


The cost of living crisis is being felt as day to day costs continue to rise and affordability is squeezed.

A consolidation loan at the right time can prevent people who are still paying off their credit debts falling into financial hardship. By refinancing their credit debts onto lower interest terms with lower monthly payments, people’s financial resilience can be improved. This will also reduce the need for formal debt solutions and the consequences that can bring.

What we want to test

We know many credit unions already offer consolidation loans to members at the credit union maximum rate (or below) and recognise the potential to do more of this kind of lending but are constrained by their risk appetite and tight overheads.

We want to test enabling more consolidation lending to occur by providing bad debt support to help lenders to help reduce borrowers debt servicing costs and improve their ongoing financial position during this time of economic stress.

To achieve this aim Fair4All Finance is putting in place a partial bad debt guarantee fund of £3.5 million accompanied by related pilot support and activities. We anticipate that this guarantee fund will enable lending to support between 9,000 and 15,000 people to consolidate debts of £6,500 on average (median) and that they will save up to £21m in interest in so doing. 

The lending the bad debt guarantee fund will support will mostly target customers just outside of lenders current risk tolerance with a smaller share of lending going to those with a higher risk profile, in vulnerable circumstances. We are also offering some marketing support to enable lenders to attract more prime customers  who will not be covered by the bad debt guarantee.

The fund will operate on a shared risk and reward model with lenders taking the first losses and the fund benefiting from a share of returns if lending is profitable (after expenditure and servicing costs) in order to extend the life of the fund.

Who we’re looking to work with

We’re looking to work with up to ten credit unions to deliver this lending. We’re seeking Expressions of Interest from credit unions with existing capability in loan consolidation and the appetite to do more to utilise the fund to deliver more consolidation loans.

We’re also open to working with organisations that are not structured as credit unions, where they can provide their own lending capital and interest rates in line with the range available to credit unions to maximise the borrower benefit.

Kate Pender, Executive Director at Fair4All Finance said: ‘We’ve heard from many lenders that consolidation loans are uniquely relevant during this cost of living crisis. However their willingness to help borrowers is curtailed by the hard choices they have to make in underwriting loans and weighing up bad debt risk. This fund creates the potential to help lenders do more and we’ve specifically designed it so that a diverse customer base is engaged to further balance risk. By sharing risk and sharing reward we hope the fund can go further and be a more sustained way to help those who need it most.’

How you can express your interest and where you can find more information

Download and complete our Expression of Interest submission form here.

There is more information on the Consolidation Loan Partial Bad Debt Guarantee Fund here and our Draft Heads of Terms here.

We have also shared a draft model illustrating how the fund will operate and a technical note explaining its operation.

The deadline for Expression of Interest submissions (including submissions of supporting documents) is 6pm 18 November 2022.

The appointment of commercial lenders to utilise this fund will require additional sign off from our Board and may involve delivery through not for profit special purpose vehicles for example.

If you have any questions on the process or the pilot itself, please email Vince Cox at

Attention: We have been informed of fraudulent activity where people are offering unsecured loans using our name.

Please be careful as we do not provide loans or contact customers for this purpose. If you've been approached, please report to Action Fraud immediately via their website or on 0300 123 2040.