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Tackling Financial Exclusion – Financial Inclusion Commission, House of Lords

October 13, 2017

Theresa May talks of  ‘A Country That Works For Everyone ‘

THE poorest and most vulnerable people in the UK are “spiralling un­necessarily into debt and financial exclusion” as a result of the Govern­ment’s welfare reforms, and its “de­pressing” lack of financial services, a: A country that works for everyone?, published by the financial-exclusion select committee at the end of last month, concludes that the Govern­ment is failing to offer “fair” access to financial services — such as a bank account, loans, and support and advice concerning savings, bor­rowing, and debt — to ,a “sizeable” proportion of the UK.

People on low benefits, the un­employed, the young, the elderly, and those with disabilities, or who are mentally unwell, are the most likely to miss out on these services because they are not being offered the facilities, support, or capital to improve their finances, the report says. This creates a “vicious cycle” for those who are forced to rely on “high-cost and suboptimal prod­ucts” such as high-interest loans, pay-as-you-go mobile phones, and pre-pay energy meters.

“Christians Against Poverty (CAP) noted that those experiencing deprivation are not set up to engage well with financial services as they are lacking monetary resources, support, confidence, and import­antly, financial choices,” it says.

People in rural areas often have poor internet access. Just 38 per cent of over 75-year-olds have used the internet in the past month, the report says, and one third of people over 80 do not trust or use cash machines, much less the internet (93 per cent). Disabled access to banks or building societies is also inadequate, it says. One in eight disabled people report problems.

1.7m people in the UK do not have a bank account, further estimates suggest at least 600,000 older people are financially excluded. Homeless people and children in care are vulnerable, as they cannot always provide the identification needed to open a bank account, the committee warned. One in six people who have bank accounts struggle to understand their bills; others do not understand the inter­est charged on loans, or how to save, use credit cards, pay tax, and man­age debt.  All too often, disabled customers are being failed by banks who are not adjusting their communications and procedures to serve them properly, she said. The committee had been told of banks contacting deaf people by phone and sending written PIN numbers to blind people instead of using Braille.

The report recommends that all primary-school children in England are taught how to use and benefit from financial services in the UK, as is currently the case in Scotland, Wales, and Northern Ireland. The Money Advice Service, which is due to close later this year, should be replaced by an equally “effective and impartial” tool, it says, and the Government should work with banks to offer courses on online banking, and other life skills.

The Bishop of Birmingham, the Rt Revd David Urquhart, who is a member of the select committee, and of the Banking Standards Board, said: “Now is the time to put these practical recommendations into practice so that all members of society can participate and con­tribute to a flourishing UK.”


  1. Designate a senior minister as the government lead on financial inclusion, and financial capability, with the title of ‘Minister for Financial Health’
  2. Establish a Ministerial champion for financial inclusion in each interested Department and in all devolved administrations
  3. Establish an independent, expert group to report to the Minister for Financial Health on emerging issues and on progress toward financial inclusion, similar to the Financial Inclusion Taskforce
  4. Place a statutory duty on the Financial Conduct Authority to promote financial inclusion as one of its core objectives
  5. Establish an independent, industry-funded think tank to work with consumer groups, tackle regulatory challenges and facilitate innovation in the interests of financially excluded consumers
  6. The Competition and Markets Authority to promote transparent pricing as part of its investigation into retail banking
  7. The new Payment Systems Regulator to ensure Direct Debits and Faster Payments are accessible to small organisations and new entrants
  8. Regulators to ensure payment mechanisms are responsive to the needs of all consumers
  9. The Department for Work and Pensions to promote inclusive alternatives to the Post Office Card Account to support the introduction of Universal Credit, which meet the new basic bank account industry standard agreed by HM Treasury, including electronic payment facilities
  10. The Financial Conduct Authority to promote greater consistency and accessibility in identity requirements for opening a bank account, and the Cabinet Office to continue to work with industry to deliver a world-leading digital identity that supports financial inclusion
  11. Government to enable the use of public sector and non-traditional data incredit scoring, with safeguards, to make access to financial services easier for excluded groups
  12. Government to lead a collective effort with retail banks and others to promote wider data disclosure and to fill the low income credit gap which has been widened by departing payday lenders
  13. Promote measures to make community finance institutions more sustainable, such as government lifting the APR cap on credit unions, lenders and investors developing a better understanding of business models and risk, and community lenders attracting a wider customer base
  14. Adapt Scotland’s Debt Arrangement Scheme for the whole United Kingdom, with frozen interest, reduced arrangement fees, more breathing space, reduced time on the credit file and the offer of financial skills training
  15. Promote a more coherent approach to customer-focused debt advice through better coordination and clear regulatory guidance
  16. Rebalance government subsidies for savers to ensure everyone is encouraged to save, introduce auto-enrolment for workplace savings schemes and conduct a feasibility study into which savings models work best for people on low incomes
  17. Government to conduct a robust evaluation of ‘Pension Wise’ to ensure that everyone has access to an affordable, objective service that is fit for purpose
  18. The Department for Work and Pensions to work with the industry to deliver a Swedish-style pensions dashboard to help people understand the prospective real value of their consolidated public, private and occupational pension income
  19. The Financial Conduct Authority, using its proposed new financial inclusion objective, to ensure that risk profiles, premiums and refusals of cover in the personal insurance market are based on accurate information
  20. The Treasury to lead a debate on suitable and affordable protection for consumers unable to obtain personal insurance through the market
  21. Provide financial skills training from primary school through to retirement, including at key life stages and events, and covering cultural as well as technical aspects of money management
  22. Develop a robust, outcomes-based evaluation of how to improve financial capability, with resources to enable it, developed with industry, government, consumer groups and civil society, and coordinated by a reformed Money Advice Service

The report urges the Government to create a Minister for Financial Inclusion to impose its recom­mendations.

It’s online here



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