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

Fair4All Finance and WPI Economics have launched a report titled Financial inclusion and growth. The report sets out how financial inclusion can be a core part of achieving the UK Government’s growth mission.

The report looks at three key areas; savings, car insurance and better financial wellbeing, and argues that greater financial inclusion in these areas leads to increased growth.

In the case of car insurance, removing the poverty premium would generate an extra £369 million per year for the UK economy. Over the course of this Parliament, UK GDP would be £1.5 billion higher as a result.

This report follows the recent launch of Fair By Design’s new position paper week titled Driving Change: Policy Ideas to Tackle the Car Insurance Poverty Premium.

Fair By Design’s Director, Rebecca Deegan, said:  

“The new analysis by Fair4All finance is further evidence that investing in financial inclusion is good for people and good for the economy.

“Too many people are excluded or are charged more for essentials, paying a poverty premium because of factors they cannot control, such as where they can afford to live. 

“For instance, people living in deprived areas can pay over £300 more on car insurance per year than those living in more affluent areas. But as this new research shows, tackling the poverty premium in car insurance can grow the economy by hundreds of millions of pounds per year.  

“This should be a no-brainer. This is growth that puts money back into people’s pockets. We urge the Government to be bold as it develops the Financial Inclusion Strategy over summer, and include concrete actions to reduce poverty premiums in insurance and credit.”

“My washing machine and hoover both went within a week of each other. I applied for a credit card, but that was rejected due to whatever I didn’t have in the bank. If you go with the catalogues, you’re paying huge interest – it’s poor quality and you’re paying more for it.” Lived experience contributor, Give Me Some Credit.

Fair By Design has launched its latest project, an online gallery titled Give Me Some Credit: The Reality of Life Without a Safety Net. You can view the online exhibition here.

For the past year Fair By Design has worked with The Poverty Alliance , Scotland’s network of organisations and individuals working together to end poverty, on this project to show what it is like to have no access to affordable credit.

Fair By Design brought together a group of 14 people, all of whom had experience of not being able to access affordable credit at a time of need. Using camera phones, they took photos and wrote stories to bring to life the day-to-day personal impacts on them.

Each photo and story reveal a unique perspective, from the stress of a household appliance breaking that you can’t afford to replace, to the anxiety of unexpected health emergencies.

Give Me Some Credit: The Reality of Life Without a Safety Net asks: what would you do without a safety net? And how can we build a fairer system where affordable credit is accessible to everyone?