Transform
Transforming the market to test and deliver the right products to all customers who need them
Working with the industry
People in financially vulnerable circumstances are currently under-served. Their needs are not recognised as distinct or attractive, and innovative propositions to address this aren’t being developed either at pace or at scale.
We’re working with the industry to change this and address the most complex challenges facing people experiencing financial vulnerability, so that the market supports the design and delivery of new products and services, both now and in the future.
Developing new products and services to address market gaps
Kate Pender
Fair4All Finance
Catalysing change
We’re catalysing market change by using funding, insights and innovation to improve supply and increase demand for better designed products
We’ve committed £30m to encourage and support mainstream lenders to deliver cost of living propositions such as no interest and consolidation loans
Our customer segmentation model is helping organisations better understand and serve people in financially vulnerable circumstances, having now been accessed by more than 260 organisations
We’ve worked with partners to develop and embed benefits calculators into lender journeys, helping over 100,000 customers of community finance identify an extra £705 each in unclaimed financial support
We’ve invested in technology solutions to address the gap in the market for agile loan management systems designed and priced for community finance providers
to encourage and support mainstream lenders
Case studies
No Interest Loans
Our No Interest Loan Scheme (NILS) provides a vital financial cushion for people unable to access or afford existing forms of credit, but who can afford to repay small sums, by offering a way to spread essential or emergency costs. Our ambition is to test and prove a model which is capable of being scaled and sustained.
So far £10m in affordable credit across more than 14,000 loans has been provided through the pilot to people who would have otherwise been declined.
An interim evaluation shows 80% of loans appear to be reaching those in financially vulnerable circumstances, and that the scheme has the potential to help many more.
This increase in available affordable credit has been made possible thanks to the efforts of seven lenders, funding from HM Treasury, JPMorgan Chase, the Scottish and Welsh Devolved Administrations, and the continued support of Toynbee Hall and Fair By Design who worked with us to develop this pilot.
Consolidation loans
Consolidation loans can serve as a helpful option for many people with an ever-spiralling amount of debt. Bringing all outstanding debt together into one place may reduce the interest rates applied, the monthly payments, and the number of companies to which money is owed.
So far we’ve invested around £12m funding of lending capital with a component of bad loan guarantee to help responsible lenders support more people who are juggling multiple debts.
The pilot will enable the scaled testing of consolidation lending to explore and prove what works. It’s expected to support more than £50m in extra debt consolidation lending from My Community Bank, and Great Western Credit Union predict it will save their customers who take out consolidation loans in South West England at least £200–£300 in interest a year.
We are also partnering with fintech ClearScore on back office technology that enables direct settlement of consumer debts. This eliminates the risk that consolidation loans are not used to pay off existing credit cards and debt (and without this technology, it currently means lenders have to ‘double count’ debts in affordability assessments). This should expand access to loans, reduce interest rates paid by borrowers and reduce risk for lenders. We are supporting lenders to trial this new technology as well as supporting ClearScore to develop it.
Customer Segmentation
In order to drive system-wide change in financial services, with better outcomes for both customers and providers, we wanted to provide greater insight into the characteristics of people in financially vulnerable circumstances.
Our segmentation model, the first which focuses explicitly on people in financially vulnerable circumstances, delves into this excluded consumer group looking not just at demographics, but also lifestyle, attitudes and behaviours. Our model identifies six core segments – from ‘squeezed and sliding’ to ‘credit crisis families’ – resulting in an actionable tool to inform business decisions or product development for this under-served market.
The segmentation continues to be well used by banks, building societies and insurers, and in 2023 we started to see more organisations use this as an input for proposition design. Over 260 organisations have now accessed these resources, and we’ve facilitated bespoke deep dive sessions with four major financial institutions serving almost 50m customers in the UK.
