Dormant Assets consultation a key opportunity in the fight against financial exclusion
As the Government opens a consultation on how the next £880m of dormant assets should be deployed, we’re calling for financial inclusion to be prioritised so that everyone, not just the well-off can withstand life events, financial shocks and unpredictable incomes.
‘Financial exclusion is an economic, health and social emergency’ said Sacha Romanovitch OBE, CEO of Fair4All Finance. ‘Some 14 million people – often families in the most deprived communities in the UK – are unable to access fair and affordable financial products and services to help them manage life’s ups and downs.
‘With the first tranche of Dormant Assets funding and through collaboration with others, we have started to make significant impact to improve people’s lives – this work must continue.’
Examples of the progress made so far includes:
- Increasing affordable credit provision by a third through funding community finance providers in some of the most deprived parts of the country, so that more people can borrow at affordable interest rates and avoid ‘loan sharks’
- Preserving 50% of lending capacity targeted at people in vulnerable circumstances during the pandemic through a £3.9m Covid-19 Resilience Fund
- Piloting a new no interest loan scheme (NILS) to help people spread the cost of emergency expenses and rebuild their credit record
‘This work makes real changes to people’s lives’ said Romanovitch. ‘Our Dormant Assets funding has already provided people across the country with a stepping stone to financial resilience, improved their physical and mental health and enabled them to play a full part in their communities.’
‘Long term change requires long term funding that is additional to government spending. We welcome the recognition of this in the consultation and the Government’s wish to continue focusing Dormant Assets funding on driving systems wide change.’
‘Extra funding would enable us to continue making progress on significantly increasing access to affordable credit and piloting and scaling new financially inclusive solutions such as consolidation loans, fair and affordable insurance, and solutions to address appliance poverty.’
Caroline Siarkiewicz, Chief Executive Officer at the Money and Pensions Service said:
‘Financial wellbeing is as important as ever, as people hit hardest by the pandemic are now facing further financial pressures with increased costs of living, and access to appropriate products and services for all is an important part of that picture.
‘Long term funding for financial inclusion will benefit the most vulnerable in society and those financially at risk.’
Theo Hadjimicheal, Chief Executive of Responsible Finance said:
‘Ask any of the more than 100,000 people who borrowed from a community development finance institution (CDFI) over the last three years what access to an affordable loan meant to them. A replacement fridge, clothes for a child, a vet’s bill paid.
‘Credit and financial services are a fundamental part of how we live our lives. Everyone should have access to fair products and CDFIs increase choice for those with the fewest options. Through Fair4All Finance’s work, Dormant Assets have already played an important role in helping those 100,000 people access finance from CDFIs when they needed it, saving them £200 in interest payments on a £400 loan compared to high-cost lenders.
‘The expanded Dormant Assets Scheme can have a huge impact on boosting financial resilience by enabling the scale up of CDFIs to serve the millions of people still unable to access a fair loan when they need one.’
Robert Kelly, CEO of ABCUL said:
‘As the cost of living continues to increase it’s likely more and more people will fall into financially vulnerable circumstances. The need for greater financial inclusion and the provision of responsible financial products and services has never been more evident.
‘Credit unions have a long track record of building financial resilience across communities and workforces all over the country. Long term funding towards financial inclusion is crucial to keep on developing the fair and affordable products and services millions of people desperately need. The credit union sector stands ready to proactively play our part in the months ahead’
Marlene Shiels OBE, CEO of Capital Credit Union said:
‘Without more support to tackle the growing problem of people falling into a financial abyss, we will see unprecedented numbers of people fall further into financial exclusion.
‘There is a real opportunity to help significantly more people achieve financial stability through innovation and partnerships working with Fair4All Finance and through credit unions supporting this work by delivering products and services that support financial wellbeing.
‘We’re already seeing the positive impact that Dormant Assets are having on financial inclusion, but there is still so much more work to be done.’
Martin Coppack, Director at Fair By Design said:
‘We’ve seen the positive impact Dormant Assets funding can have on people in financially vulnerable circumstances through our work with Fair4All Finance piloting a No Interest Loan Scheme.
‘As the cost of living squeeze continues, financial exclusion is an ongoing and growing problem. Too many people are still having to pay a poverty premium when accessing financial services.
‘It’s vital that further long term funding is directed towards financial inclusion to ensure everyone has access to the essential products and services they need at a price they can afford.’
We’d love to work with you
An expanded Dormant Assets Scheme offers the chance to continue delivering long term funding to increase financial inclusion and improve the lives of millions of people in vulnerable circumstances.
You can read more about our work and the growing need in our Tackling financial exclusion through Dormant Assets report.
Both during the consultation and beyond, we’d love to work with you to ensure we prioritise and deliver the work that will make the biggest difference to the people across the country who need it most.