Levelling the playing field: building inclusive access to financial services

• Context
• The study
• Key findings
• Points to consider

Context

People from minority ethnic groups face greater exclusion from the financial system and hold fewer financial products, despite experiencing more of the life events that might require them. There are multiple issues in the entrenched design and behaviours in the system that contribute to this, such as a lack of trust, a ‘one size fits all’ approach and a lack of transparency around decision making in the finance sector.

The report notes that the research was undertaken before the FCA’s Consumer Duty regulation came into force in July 2023, in which delivering and demonstrating good outcomes for customers is a guiding principle, and which requires firms to consider the ‘characteristics, needs and objectives of their customers in the relevant target market’. This goal of this research is that be applying an ethnicity lens to the products and services offered, the sector can deliver better outcomes through developing an inclusive design approach.

The study

The study comprised a review of existing literature, analysis of the long running Financial Research Survey from research company Ipsos, in depth expert interviews, qualitative ‘Exploration Labs’ conducted online and in person in London and in Manchester by research company ClearView Research (CVR), and a bespoke quantitative survey by Ipsos UK of 2,000+ UK adults with interlocking quotas set on ethnicity by age, gender, social grade and working status.

At every stage, the research was informed by a lived-experience advisory group of eight people recruited by CVR and the findings were also reviewed and validated by this group.

The work was commissioned by not-for-profit financial inclusion organisation Fair4All Finance, supported by a team of industry experts and co-funded by charity the Esmée Fairbairn Foundation and NatWest Group.

Key findings

The findings include the following:

People from minority ethnic groups experience higher levels of discrimination: around one in five people from minority ethnic groups have experienced discrimination due to race when dealing with financial providers (22%).

There are disparities in need versus use: people from ethnic minority groups are more likely to have experienced a financial event such as moving house or buying a car but are also less likely to hold financial products that can help smooth expenses and build long-term financial security.

There are several barriers to people from minority ethnic groups accessing finance including the following:

• Lack of trust in financial service providers based on previous experiences or fears of discrimination
• A one-size-fits-all approach adopted by providers which is not suitable for people with specific cultural or religious needs
• English as a second language
• Additional lengthy hurdles such as submitting multiple applications and receiving contradictory information, or only being able to access high interest rates despite a good credit score
• Credit scores and rejections – similar levels of rejection to white applicants but people from minority ethnic groups are less likely to find out the reason
• Information and financial literacy – a range of barriers including access to culturally appropriate advice, bad experiences with advisers, access to information sources and clarity of communications

Points to consider

• Methodological strengths/weaknesses: The report discusses the efforts that were made to mitigate against any limitations of the methodology including the following:
  • Working with an advisory group of people from ethnic minority groups to validate each stage of the research and ensure cultural sensitivity and understanding.
  • Ensuring the exploration labs were inclusive for people from seldom heard groups and those with English as a second language or other needs·
  • Adapting a convenience sampling method by adding in quota sampling to increase representation
• Applicability: Of interest to financial service providers, regulators and policy makers and anybody from or working with people in minority ethnic groups.
• Relevance: Highly relevant given the findings that there is a disparity in experience and outcomes
• Generalisability: The report notes that it can’t be generalised to all of the diverse minority ethnic groups in the UK, despite the robust methodology, as there are still groups and communities that are harder to reach and would have benefited from other adaptations such as translated surveys and engaging local groups