Transforming Affordable Credit in the UK

Setting out our initial findings on what it will take to build capacity and capability in the community finance sector to scale the provision of affordable credit

Fair and affordable lenders like credit unions and CDFIs provide a vital service to people in vulnerable circumstances excluded from mainstream credit. Responsible credit can help customers to meet unexpected costs, smooth incomes or make essential purchases that are otherwise unaffordable upfront, as well as saving hundreds or thousands of pounds a year compared with high-cost credit.

Yet responsible lending makes up only a fraction of short-term lending in the UK. Each year, affordable credit providers make just £250m of loans to this group, while over the same period, high-cost short-term credit providers lend £3bn. This is why Fair4All Finance’s first area of focus is to scale the affordable credit sector to meet this demand.

Our report sets out our initial findings on what it will take to build capacity and capability in the sector. This is based on the shared Theory of Change we have developed with the wider sector, as well as our pilot programme, which involved working closely with five affordable credit providers to learn in detail about the challenges and opportunities facing them.

To help meet this scale-up challenge, we have identified five opportunity areas for capability development:

• system change and impact
• funding and finance
• markets, customer insight and product design
• operational excellence
• governance, leadership and talent

The report sets out some of our findings and areas of future enquiry in each of these areas.