Our Head of Markets, Consumer Insights and Product Design, Lauren Peel, writes about the greater financial exclusion of women and what the financial services industry can do to help:
International Women’s Day provides an opportunity to celebrate the women that we admire, that we love, that are making businesses and society a better place. The world is full of them as annual power lists show.
But International Women’s Day doesn’t often create a space for women who are left behind, forgotten and struggling make ends meet every day. Women who were balancing a weekly budget long before the pandemic and the cost of living increases, who are now left choosing whether to eat or heat and how to keep their families going.
The financial lives of excluded women
Poverty, low incomes and financial exclusion can of course impact everyone. But access to the correct support and services, and the systems where we operate, aren’t always fair and equitable. And we see this at every life stage.
It won’t surprise anyone that 85% of lone parent families are where children live with their mum. But the financial burden of this – whether it’s trying to balance working against the cost of childcare (around £6,800 for part time care for a child under 2) or trying to survive the school holidays with mums going without a meal – means that nearly half of all children in lone parent families live in poverty.
At all ages, between 58% and 68% of unpaid carers are women, caring for people inside and outside of the home. Almost 1 in 4 carers are worried they may not have enough money to cover their monthly expenses. And that was before we were aware of the full extent of cost of living increases.
Later life doesn’t get better. Between 2008 and 2019, the number of single women aged 60-64 living below the minimum income standard doubled from just over 100,000 to nearly 200,000. This coincided with the state pension age rise for women, leaving more relying on out of work benefits or taking jobs on relatively low pay.
1 in 5 female pensioners live in poverty (vs 16% of male pensioners, still not great). Gaps in national insurance history due to having to take time off for childcare and the average longer life spans of women both contribute.
This problem isn’t going away A national study highlighted the size of the gender pensions gap, with the average pension pot for a woman under two thirds of what it is for a man.
(Trigger warning, domestic abuse)
Women who have experienced domestic abuse are highly likely to have suffered economic abuse too. Around 1 in 3 women who have experienced abuse said that access to money during the relationship was controlled by the perpetrator. And nearly 2 in 5 had to use credit to pay for essentials such as food, heating and clothing for them or their children. The figures of those who aren’t reporting abuse will be much higher.
Women are a diverse group – and reporting should reflect this
Most published research shows important characteristics independent of each other – gender, race, disability, age – but it’s critical to look at these together.
The FCA Financial Lives study shows that 63% of Black and Black British respondents had characteristics of vulnerability compared to 45% of white respondents. And that 51% of women have a characteristic of vulnerability compared to 40% of men. We can read across that if you’re a black woman you’re more likely to experience vulnerability.
I note that many of these surveys don’t include sexual orientation or gender identity, despite a 2019 study finding that LGBT+ professionals earn 16% less than their straight counterparts.
Who is helping these women?
Community finance organisations work hard to serve customers in vulnerable circumstances.
- Fair For You provides affordable loans to tackle material poverty across the UK, with lending for essential household items such as appliances and beds. Since it was founded in 2015, Fair For You has generated £50 million of social value and has helped move 71% of its customers away from high-cost credit. 86% of their customers are women, many are single parents or in families who are struggling to get by and their proposition offers a lifeline for essential items
- Moneyline, a brilliant women-led organisation, recently released their social impact video with Michael Sheen. Their core demographic is young women with children who rent their home, often on an income under £18,000 and living in some of the most disadvantaged neighbourhoods in the UK. Almost all of their loans are under £1,000 and for less than 52 weeks – the amount you need when the washing machine breaks, or if you don’t want your children to miss out on a school trip or a holiday. They have saved their customers £5.4m in loan interest compared to high cost credit
- Credit Unions operate in their local communities and through payroll partnerships and serve similar customer bases to those outlined Some have recently introduced a Family Loan, repaid through child benefit payments, and say this is a good way to offer crucial affordable credit to people they couldn’t normally serve. Fair4All Finance is undertaking research to understand how family loans impact customers and learn more about good practice in delivering them, recognising that there isn’t a one size fits all approach and customers should never feel ‘locked in’. Many Credit Unions are also led by brilliant women who have customer and community at the core of their business
- Purple Shoots is a not-for-profit micro finance organisation that provides small business loans at fair rates. Their case studies tell the stories of women who have started their own business, with their support, and the impact for them and their communities
What can you do?
The impact that Community Finance organisations have makes a huge difference to their individual lives of women across the UK, providing access to credit that allows them to meet the essential needs of their families and for themselves and encouraging saving to build their financial resilience.
There’s a lot more that can be done and all financial services providers can play their part:
- More investment is needed in organisations like Moneyline, Fair For You, Credit Unions and others in the Community Finance sector who are serving women in vulnerable circumstances. Only 1.1% of impact capital in the UK impact investment market comes from banks and pensions fund managers, compared to the global average of 8% in 2016. Increased investment allows these organisations to serve more customers, grow sustainably and offer a more diverse range of products and services
- All financial services providers should have systems and processes in place that help people to maximise their income. Salad Money (where 3 in 4 customers are women) and Scotcash (almost 3 in 4 customers are women) have partnered with benefits calculator provider InBest. Together they have helped 12,665 people identify £5,146,853 in benefits they can claim each month to top up their incomes – that’s an additional £400 per person each month
- Follow inclusive design processes for financial propositions and services, ensuring representation from a diverse range of customer groups. This could be for your proposition overall, or for tailored products designed to meet the needs of those with unstable and unpredictable incomes. When undertaking customer research for proposition design, don’t tick off diversity boxes (gender, race, age etc) but ensure you have a genuine representation from across different communities. The majority of your respondents could be women but if they’re all white, non-disabled, mid-wealth women you’re not going to get what you need to deliver to customers in vulnerable circumstances
- Similarly, consider how you’re reporting on customers served and in social impact reports. Organisations that are more established in analysing and reporting on data should move beyond gender to include race, disability and other factors. This allows organisations to identify where there are gaps in who they are serving and start understanding why. Organisations who do this well and diversify their propositions can expect to see sustainable growth in their business, as well as the social impact of reaching many who are excluded.
Change is slow – but those of us with privilege can accelerate it
Things are improving for women in many areas – we’re seeing more women on Boards, in Senior Roles, leading charities and doing great work in their communities. But life isn’t improving for all women and we need more organisations to understand the challenges, and then take meaningful action, for things to get better at scale.
That starts with listening to others, with diversifying our sources of information and ensuring we’re seeking the views of people who are excluded on a regular basis. Whether you can take action on the above or have other ways to improve the financial lives of women in vulnerable circumstances, there is a huge amount to be done. Let’s get doing it.