£65 million in Dormant Assets funding released to Fair4All Finance
Fair4All Finance will use £65 million to increase access to fair, affordable and appropriate financial products and services for those struggling financially. This includes an expanded Affordable Credit Scale-up Programme, which aims to improve the access and availability of affordable credit, and other initiatives for those in financially vulnerable circumstances.
Since its launch, Fair4All Finance has had the opportunity to gain a deep understanding of the needs of people in vulnerable circumstances and how financial products and services can be delivered to increase their financial resilience and wellbeing.
The COVID-19 pandemic has heightened the need to accelerate and extend the organisation’s work to ensure that financial products and services that meet the needs of this group are available at scale. This funding will enable the rapid expansion of Fair4All Finance’s programme to scale the provision of affordable credit. In addition, part of this funding will be used to urgently develop other financial product and services initiatives for the emerging needs of customers in financially vulnerable circumstances for whom affordable credit is not an appropriate solution.
The expanded Affordable Credit Scale-up Programme will directly support the growth of community finance organisations in the UK, including CDFIs and credit unions. For the millions of people in the UK excluded from access to mainstream credit, community finance organisations provide a lifeline. Affordable credit can help customers to meet unexpected costs, smooth incomes or make essential purchases that are otherwise unaffordable upfront, as well as saving them hundreds or thousands of pounds a year compared with high-cost credit or illegal money lending operations. The wrap-around support that these organisations provide, such as linked savings products and debt advice services, also create a pathway for individuals to increase their long-term financial wellbeing.
This programme is in addition to the £5m that Fair4All Finance has already committed to its COVID-19 Resilience Fund, which is supporting the affordable credit sector through the immediate crisis so it can continue to provide its vital service to consumers. The allocations to date from this fund support organisations delivering nearly 40% of the affordable credit provision in the UK and enables them to remain sustainable as organisations.
Sacha Romanovitch, CEO of Fair4All Finance, said:
“We appreciate this additional distribution of funds and will ensure that it supports the development of sustainable solutions for people in vulnerable circumstances. Many of these people are facing unprecedented challenges as a result of the current crisis and it’s more important than ever that the whole financial system supports them to be financially resilient. It’s essential that affordable credit and other supportive financial products and services are available to help people to better manage through the crisis.”
Baroness Barran, Minister for Civil Society, said:
“In these challenging times it is right that those struggling financially have speedy access to fair and appropriate services, including affordable credit.
“This investment through the dormant assets scheme builds on the unprecedented package of government support for people in vulnerable circumstances and will help Fair4All Finance to develop and scale their vital financial support initiatives.”
Ends
Contact
- Leonie Jarrett, Communications Manager, leonie@fair4allfinance.org.uk
Available for interview
- Sacha Romanovitch, CEO, sacha@fair4allfinance.org.uk
- Tom Lake, Head of Policy & Strategy, tom@fair4allfinance.org.uk
Notes to Editors
About Fair4All Finance
Fair4All Finance was founded in 2019 to support the financial wellbeing of people in vulnerable circumstances with support from DCMS and the Inclusive Economy Partnership. Initially funded by £55m of dormant assets money for financial inclusion, its mission is to increase access to fair, affordable and appropriate financial products and services.
Its initial focus is on addressing the problem of access to affordable credit by providing support and funding for the affordable credit market. Each year, affordable credit providers originate just £250m of loans, while over the same period, high-cost short-term credit providers originate £3bn – more than ten times as much. Fair4All Finance are aiming to grow the provision of affordable credit to meet this demand – a “10x challenge”.
The Affordable Credit Scale-up Programme is a tailored programme to support sustainable growth for the affordable credit sector over the next five years through both investments and grants. It aims to help meet the challenge of scaling the provision of affordable credit by 10 times.
The COVID-19 Resilience Fund will provide short-term grant funding to help affordable credit providers to deal with the financial and operational costs of the COVID-19 crisis, and to help the sector emerge in a resilient state from the crisis.
About Dormant Assets
The current dormant assets scheme enables banks and building societies to voluntarily channel funds from dormant accounts – defined as those untouched for at least 15 years – towards good causes in the UK through RFL. Customers can reclaim their money at any point.
Since 2011, over £1.2bn has been transferred into the scheme, with over £600m made available for good causes in the UK. RFL must retain the amount they deem prudent in order to meet customer reclaims in perpetuity and can only release surplus funds to The National Lottery Community Fund. The National Lottery Community Fund, the legal distributor of dormant assets funding, apportions this money between the nations.
The Dormant Bank and Building Society Accounts Act specifies that funds in England can only be spent on youth or financial inclusion, or directed to a social investment wholesaler. There are five organisations set up to manage this unique type of funding: Big Society Capital, Access Foundation, Youth Futures Foundation, Fair4All Finance, and The National Lottery Community Fund itself.
https://www.gov.uk/government/publications/the-dormant-accounts-scheme