Background
The Financial Inclusion Commission is an independent body that aims to increase financial inclusion in the UK, raise awareness of the issues related to inclusion, and influence stakeholders such as policy makers, regulators and the financial services industry. By 2020, the Commission wants financial services to be accessible, easy to use and meet people’s needs over their lifetime, and also for people to have the skills and motivation to use these services and benefit meaningfully from them. The report summarises the position of the Commission on the current state of financial inclusion and sets out its recommendations for what is required to meet its vision. It is particularly relevant as it reflects on the situation since the Government’s Financial Inclusion Taskforce was wound up in 2011.
The report set out to:
- Understand the current state of financial exclusion and any interventions.
- Review changes since the Financial Inclusion Taskforce was wound up.
- Raise awareness of the issue of financial exclusion.
- Influence policymakers, regulators, the financial services industry and other key stakeholders.
The study
This report is a review of existing research supplemented by additional qualitative data specifically written or oral evidence from representatives of a variety of organisations and also from private individuals. Eighty-four different organisations or individuals provided evidence to the Commission, including banks, community finance institutions, trade associations, insurance companies, charities, local authorities, housing providers, academics, other service providers and people who are or have been financially excluded. Experts within the Commission synthesised this evidence and used it to make recommendations to inform government policy and influence other stakeholders such as regulators and the financial services industry.
Key findings
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Leadership: The UK does not currently have a financial inclusion strategy, but there is a need for leadership and coordination of policy and interventions.
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Banking and payments: Low-income consumers in particular, are not well served by existing providers, and alternative suppliers face challenges. However, changing technology will provide opportunities to improve inclusion.
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Credit and debt: many people are excluded from mainstream credit and the supply of affordable credit may not be able to meet the demand. Debt solutions and advice are not fit for purpose, or consistently available.
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Savings and pensions: Many people are not financially resilient and there is a lack of suitable savings products for those saving small sums. Pension reforms may cause inclusion problems in the longer term.
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Insurance: There are not enough suitable products, and insurance is seen as irrelevant or unaffordable for many.
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Financial capability: Many people do not understand enough about finances or how to manage their money. Universal Credit is likely to change how people on low incomes manage but the impact is not yet understood.
Points to consider
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Relevance: This report is particularly relevant as it assesses the state of financial inclusion since the Government Task Force ended in 2011. It also considers the impact of recent and ongoing changes such as pension reforms and the introduction of Universal Credit, as well as the effect of changing technology and economic conditions.
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Generalisability/transferability: This report covers the UK and is not transferable to any other country or area, though of course the findings may be relevant in similar societies.
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Applicability: The report provides information and makes recommendations that can act as a starting point for further discussions about financial inclusion. The recommendations represent the position of the Financial Inclusion Commission, based on the evidence gathered and on the expertise of the Commissioners.
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Methodological strengths or limitations: The vast expertise and experience of the Commissioners, the diversity and relevance of the organisations that took part, and the contribution of an advisory body drawn from other stakeholder organisations all suggest that both the research and the report are of the highest quality.
Full report
Financial inclusion: Improving the financial health of the nation - full report
