Dormant accounts financial inclusion programme - Statement of intent

Richard Collier-Keywood has been appointed as Founding Chair of Fair4All Finance, the Dormant Assets Financial Inclusion Organisation. Mr Collier-Keywood has been appointed by an independent panel, chaired by Sir Leigh Lewis, for an initial four year term.

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The statement of intent is also available as a PDF document

Introduction

On 9 August 2018, the Government announced that it will fund the establishment of the Dormant Assets Financial Inclusion Organisation - now called Fair4All Finance - which will be responsible for deploying £55 million of funding from dormant accounts. Fair4All Finance will primarily address the problem of access to affordable credit and alternatives. The organisation will aim to bring in co-funding from a range of investors, including the private sector working on the issue of financial inclusion.

This statement sets out the process, centred on the users of these products and services, which will shape how that money is used and the outcomes it aims to achieve.

Statement of Intent

When you struggle financially it becomes increasingly challenging to support your family and to maintain your mental health and wellbeing. Many people slide into problem debt and struggle to get by.

Making good use of appropriate financial products and services – savings, borrowing and insurance – can help build the financial resilience needed to withstand the down times and dramatically improve lives.

We need to address financial capability and financial inclusion together if we are to make a difference. This means that the use of funds from dormant bank and building society accounts must complement the work of the newly established Single Financial Guidance Body whose role it is to improve levels of financial capability in the UK.

We know from consumers who took part in the Financial Conduct Authority’s 2017 Financial Lives Survey in 2017 that access to fair, affordable and appropriate products can be limited, particularly when needed during certain life stages and for certain groups of people.

For example:

• High cost credit and rent to own. 6% of all UK adults used high cost credit (where the APR is equal to or above 100%) in the previous 12 months. This includes payday loans, home collected loans, hire purchase and other similar products. Use of high cost loans is highest among 25 - 44 year olds (9% of the population) and younger single parents are three times as likely to be using high‑cost credit than the UK average. Access to affordable credit is crucial to help people manage their finances and deal with unexpected events.
• Savings buffer. 13% of UK adults have no cash savings, 24% have less than £1,000 as a savings buffer and 19% hold between £1,000 and £5,000. Younger adults are most likely to have few or no savings, with 57% of 18-24 year olds holding less than £1,000. This severely restricts their capacity to manage transitions, such as moving to rented accommodation for the first time, or external shocks, such as ill-health or redundancy.
• Adequate insurance. While 48% of 25 - 34 year olds rent their homes, only 19% have home contents insurance. Some of them are paying more for individual insurance contracts to cover phones, white goods, furniture, perhaps through rent-to-own contracts, rather than covering all of their contents for less, in one insurance policy.

Engagement of Stakeholders and End Users

During 2018, a joint project team from BLF and DCMS, with close involvement from HM Treasury, the Department for Work and Pensions, and the Financial Conduct Authority, has been able to be more precise on where the focus of Fair4All Finance might be.

A collaborative series of interviews, focus group discussions, roundtables workshops and surveys helped us explore the barriers faced by end users, the gaps in the market and how to maximise the impact of £55m funding to tackle access to fair, appropriate and affordable financial products and services.

The project was also aided by a research report, comprising further in-depth information on the process of the research, our findings and the specific design of the delivery of interventions.

Often, financial inclusion research reports are written from a statistical or quantitative perspective. Our report is led by the stories of people who continue to experience barriers to accessing fair, appropriate and affordable financial products and services. This has allowed us to listen to their suggestions about how things could be improved.

Read the report Understanding The Decision Making Of People Experiencing Financial Exclusion (pdf, 853KB).

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