Fair By Design responds to Government’s Financial Inclusion Strategy
The Treasury has published the Government’s Financial Inclusion Strategy. Its publication is recognition that financial exclusion remains a persistent and systemic issue across the UK and Fair By Design hugely values the hard work of the Committee members and team that have delivered the Strategy. Fair By Design see this as a stepping stone, not the final say, on how to address the structural drivers of the poverty premium and financial exclusion because…
1. It is a Strategy of consolidation, not transformation.
The Strategy demonstrates that there are numerous brilliant initiatives already under way across the sector to improve financial inclusion, all of which are to be celebrated and applauded. There are also some new announcements in the Strategy, such as exploring an extension to the credit brokering exemption for Registered Social Landlords and the commitment of dormant assets to a small sum loan pilot, both of which we welcome. But overall, the Strategy is one of consolidation rather than being transformational. The overview and coordination it provides are useful, but we think that the Strategy lacks the ambition and urgency required to tackle the root causes of entrenched financial exclusion and the poverty premium.
2. Where is Motor Insurance?
One area where this is particularly disappointing is motor insurance, given car insurance is the costliest poverty premium faced by low-income consumers. While the Strategy acknowledges rising premiums and the disproportionate impact on vulnerable customers, it fails to propose any direct interventions to improve affordability. It references the existing Motor Insurance Taskforce, but the Taskforce’s remit centres on market dynamics and claims costs, rather than tackling the core issue of consumer affordability and inclusion.
3. An over-reliance on industry and voluntary action
The Strategy leans heavily on industry-led initiatives and voluntary codes, which cannot guarantee consistent or equitable outcomes on their own. While we welcome the creation of an Inclusive Design Working Group and the focus on inclusive product design, these efforts must involve policymakers and regulators to deliver systemic change. Stronger Government-led measures, such as a Fair Banking Act, are necessary if we’re going to close the £2bn of unmet need for affordable credit.
4. It needs a stronger accountability framework
We value the Strategy’s focus on outcomes as this creates flexibility for the many organisations involved in delivering the Strategy to meet the needs of different consumers and markets. But it lacks clear targets, metrics, or accountability mechanisms.
Fair By Design also urges the Government to add people living in poverty and on low incomes to the group of people the Strategy is expected to have a positive impact on, as being on a low income is a key determinant of whether someone experiences financial exclusion.
Read: A Plan for everyone: why 20 million people need the Financial Exclusion Strategy to deliver
The full Strategy – https://lnkd.in/dxN8Z9U7
