Tackling Financial Exclusion Through Local Finance Partnerships sets out a blueprint for successful partnerships that could be replicated across the UK. It provides a step by step approach to achieving the changes needed and is based on successful approaches in the USA.

Two million people do not have a bank account and nine million people do not have access to mainstream credit options.[1] So at least 14% of the UK’s population faces financial exclusion. This impacts on their ability to participate in the economy and build financial resilience through savings, for example.

Tackling financial exclusion and strengthening the UK’s financial capability does not require new entrants to the market. Existing finance and advice organisations with a local focus could strategically engage with each other to achieve far greater scale.

Locally-based finance organisations, such as credit unions, responsible loan funds and debt and money advice charities, offer access to advice, savings and affordable credit. They collectively reach over 3 million consumers and businesses each year.[2]

Tackling Financial Exclusion Through Local Finance Partnerships is available here. The research was based on interviews and focus groups with 22 finance providers.

[1] Financial Inclusion Commission (2015), Improving the Financial Health of the Nation, http://www.financialinclusioncommission.org.uk/report

[2] Based on figures from the Association of British Credit Unions Ltd. (https://www.findyourcreditunion.co.uk/about-credit-unions/),

Responsible Finance (http://responsiblefinance.org.uk/policy-research/annual-industry-report/),

Citizens Advice (https://www.citizensadvice.org.uk/Global/Migrated_Documents/corporate/money-advice-services.pdf), and the Money Advice Service (https://www.moneyadviceservice.org.uk/en/corporate/record-number-of-people-benefit-from-money-and-debt-advice) (all figures as of March 2017)

The Community Investment Coalition (CIC) campaigns for a radical re-shaping of the provision of affordable financial services in deprived communities.  This will reduce reliance on high cost credit, support innovation and competition in financial services markets and give people the financial tools they need to participate in the economy.

Key to achieving this change is increased transparency and public accountability of financial service providers to support consumer choice and allow effective intervention in under-served markets.  For this reason, we have championed the need for disclosure of bank lending data at a geographical level. Our campaign is supported by a range of politicians and organisations, including the Church of England.

In its final report, Changing Banking for Good, the Parliamentary Commission on Banking Standards stated that: ‘Increased disclosure of lending decisions by the banks is crucial to enable policy makers to more accurately identify markets and geographical areas currently poorly served by the mainstream banking sector’.

In 2013, a voluntary framework for the disclosure of bank lending data was agreed, with the first tranche of quarterly data released in December that year.  So nearly one year on, with four sets of data released, what do we know? A new report ‘Tackling Financial Exclusion: Data Disclosure and Area-Based Lending Data’ by Coventry and Newcastle Universities is the first significant analysis of the data.  Commissioned by Big Society Capital, CIC, Citi Community Development and Unity Trust Bank, the research found that currently, the lending data is limited and publication at postcode sector level increases the technical requirements and costs of meaningful analysis. The data does provide for some analysis of regional disparities of lending.  For example:

• Median personal lending per adult in Great Britain in 2013 was £602. Lending per adult in the lowest 10 per cent of postcode sectors was around two-thirds of this figure or less, whereas in most of the highest 10 per cent of postcode sectors lending per adult was around a third or more above the median figure. Data suggests that average personal lending tends to decline as the area’s deprivation level rises.

• Average median SME lending per business in Great Britain in 2013 was £47,072 with lending per business in the lowest 10 per cent of postcode areas below £35,000 and in the highest 10 per cent of postcode areas lending per business was over £68,000.

But this is not sufficient to support effective intervention to tackle under-served markets.

The study concludes that although the UK is now a world leader in disclosing area-based lending data, the existing data sets need to be strengthened and broadened to allow detailed and insightful analysis of which of the UK’s communities are under-served by the UK’s main high street banks.

The Parliamentary Commission, commenting on the voluntary framework, stated that ‘It will be important to ensure that the level of disclosure is meaningful..’ and that ‘the devil will be in the detail of the disclosure regime’. CIC has always and continues to welcome the significant step in bank transparency represented by the existing framework. But we believe that the quality, detail and type of data disclosed needs improvement for it to be able to identify markets and areas poorly served by the UK’s banks.

Jennifer Tankard is Director of the Community Investment Coalition