Responsible Finance

A two-year study by Fair4All Finance has identified 47 local authorities across the UK where more than half of adults are living in financially vulnerable circumstances. Diane Burridge, from Fair4All Finance says, "Everyone needs access to financial products to go about their daily lives, manage their money and be economically active. Yet millions of people are locked out of the financial system, unable to access safety nets that others rely on, like credit, savings or insurance. "Our findings leave no room for doubt that the current financial services system is not working for everyone. Industry and policymakers must unite to address the increasingly desperate situation facing millions of adults in financially vulnerable circumstances." The study found the North East (46%) and London (46%) are the regions where financial vulnerability is most acute.   Wales (24%), London (21%) and Northern Ireland (21%) have seen the biggest increase in the number of adults facing financial difficulties over the last two years. Read more about the study: https://lnkd.in/eNu85YJF #FinancialInclusion #CDFIs #ResponsibleFinance

🔥Our latest blog is out now 👏 The Role of First Loss Funding in Financial Inclusion and Economic Growth In October last year we launched a pilot to explore how first-loss funding can attract private investment to personal lending Community Development Finance Institutions (CDFIs) to support financial inclusion. Funded by London’s City Bridge Foundation, three CDFIs (Fair Finance, Fair for You CIC and Salad Money) each received £200,000 in grants to absorb initial losses and increase lending. 🙌 Key Benefits of First-Loss Funding: 1. Catalytic Investment: First-loss funds protect investors against initial losses, improving risk-return and converting potential into actual investments. 2. Evergreen Fund: Repaid loans are re-lent, creating a multiplier effect by leveraging more private capital. 3. Impact Multiplication: The pilot estimates each £1 in grants could leverage £4 in private investment, totalling £8 million in loans to underserved Londoners, saving them around £3 million in interest versus high-cost lenders. ⭐ Addressing Financial Exclusion: CDFIs help those excluded from mainstream credit by offering affordable loans. In 2023, CDFIs lent £66 million to 85,000 households, saving them £29 million in interest. However, demand outpaces supply, with unmet credit needs estimated at £2 billion annually, limiting economic participation and perpetuating fiscal drag on the economy. 😍 Economic and Social Impacts:   1. Improved Economic Growth: By enabling work, education, and local economic participation, affordable credit drives growth. 2. Reduced Government Costs: Access to fair credit decreases the social costs of financial exclusion, such as health issues, dependency on illegal lenders, and associated mental and physical harm. ✅ Pilot Results So Far:  👉 Early signs are promising, with the £600,000 grant supporting £1.7 million in loans to 2,700 Londoners and securing £830,000 in external capital. 👉 Loans are reaching diverse, underserved demographics: 59% ethnic minorities, 72% female, 88% non-homeowners, and 19% individuals with disabilities. 🪜 Next Steps and Government Policy Advocacy:  Responsible Finance aims to expand the programme to other underserved areas and make the case for a government-backed first-loss fund for personal lending CDFIs to further financial inclusion and economic growth. This pilot highlights the potential of first-loss funding as a powerful tool for catalysing public-private investment partnerships. #FirstLossPilot #CDFIs #ResponsibleFinance #PersonalLending

"Consumers who have used BNPL more than 10 times were twice as likely as those who have not used BNPL to also have a high-cost credit product and four times as likely to have missed a payment of a bill or credit commitment in three of the past six months." The Treasury is consulting on plans for The Financial Conduct Authority to regulate BNPL firms, including affordability checks and consumer protections, with the new rules being introduced in early 2025. At Responsible Finance we support moves to regulate BNPL. We hope the new regulations don't lead to BNPL firms leaving the market, which could result in financially vulnerable individuals seeking credit from high cost or illegal lenders where no affordability checks are carried out. https://lnkd.in/dE4q_N3x #BNPL #ResponsibleFinance

The latest report from Onward identifies access to finance as a major constraint on entrepreneurial activity and economic growth. It highlights that the UK has one of the highest SME loan rejection rates in the OECD at 45%. It identifies Community Development Finance Institutions (CDFIs) as an important but underused way to improve access to finance for entrepreneurs. CDFIs are under-capitalised, and increasing capitalisation could significantly boost SME funding. Introducing commercial bank-backed CDFIs could increase SME funding by £1.5-£1.7 billion and support 50-60k more businesses. The report recommends that the UK should follow the US's lead in getting banks to support CDFIs through a combination of regulatory capital relief (for lending to CDFIs) and a scorecard system.  Full report here: https://lnkd.in/eAAH_hEd #CDFIs #ResponsibleFinance #SMELending

It's a busy time for the Responsible Finance team. After the Fair Banking Act event yesterday in Parliament we've been to Millbank this morning. Discussing the Financial Inclusion Strategy, with Chris Pond (Chair), Baronness Claire Tyler and the Financial Inclusion Commission. The Financial Inclusion Commission shared new research from the CHASM - Centre on Household Assets and Savings Management (CHASM) at the University of Birmingham, supported by Mastercard. We know that affordable credit is an essential facility which many people and small businesses are denied. Our policy asks for government included: ✔️ A Fair Banking Act. ✔️ Improvements to the bank referral process so individuals and businesses declined by banks can be directly referred to CDFIs. ✔️ Expansion of credit broking exemptions so individuals in need can be referred to support and rerouted away from illegal and high-cost alternatives. You can read our full policy asks in our impact report: https://lnkd.in/eWSFydQ2 Let's keep working together to create financial inclusion. #FinancialInclusion #CDFIs #ResponsibleFinance

It was great to join The Finance Innovation Lab in Parliament yesterday to get behind the campaign for a Fair Banking Act. We heard from Lloyd Hatton MP Chair of the APPG on Fair Banking, Michael Sheen, CDFIs, Credit Unions and customers on how a Fair Banking Act can drive forward financial inclusion and economic growth. (If you're interested in the stats behind this check out https://lnkd.in/etp2BxPt). We heard from Emma Lower, from Lendology CIC who represented Responsible Finance and shared about the real impact of our members on individuals and the economy, particularly those who are disadvantaged most by a lack of access to affordable credit. Thanks Emma! And David Henny from Alpkit (First Enterprise - Enterprise Loans customer) also shared his story. Alpkit now has 200 employees and has opened its first site in Europe. They borrowed twice from First Enterprise and this growth in employee numbers and turnover wouldn't have been possible without their support. Also fabulous to see our members Tim Rooney (Salad Money), Simon Dukes (Fair for You CIC), Matt Smith (Key Fund Investments), Anna Jones (RefuAid), Karen Davies (Purple Shoots) and our Chair Peter Udale. #FairBankingAct #ResponsibleFinance #CDFIs #FairBankingForAll

Millions of individuals, small and medium-size businesses (SMEs), and social enterprises are locked out of access to affordable credit. This holds back individuals and communities by preventing them from fully participating in the economy. The government has the tools to change this. We’re proud to be part of the #FairBankingForAll Campaign, asking for the government to introduce a Fair Banking Act as part of a national financial inclusion strategy. On Monday we’ll be in Parliament, hearing from speakers with lived experience of financial exclusion, as well as speakers from The Finance Innovation Lab, Association of British Credit Unions, Federation of Small Businesses (FSB), Lendology CIC and MoneyMatiX: Inclusive Financial Education. We’ll be discussing how a Fair Banking Act could benefit the UK. www.fairbankingforall.org #FBfACampaign #FairBankingForAll https://lnkd.in/eEkjZBTR Access - The Foundation for Social Investment, APPG on Fair Banking, Fair for You CIC, Financial Inclusion Centre, Financial Inclusion for Scotland, Impact Investing Institute, incuto, Key Fund Investments, Purple Shoots , Social Investment Scotland, Triodos Bank.

Fantastic to see this video featuring Dal Dhillon from Dhillon's Brewery Ltd, speaking to Gareth Thomas MP (Minister for Services, Small Business and Exports) and Sheridan Sulskis from Coventry and Warwickshire Reinvestment Trust (CWRT) explaining how they're helping to deliver impact in communities. The brewery received funding from Coventry and Warwickshire Reinvestment Trust (CWRT) to support with its expansion. Watch it now 👀 👇 #CDFIs #SMELending #ResponsibleFinance

The third series of the Innovation in Financial Inclusion podcast launched yesterday. The series which will focus on how we can create a more inclusive financial system in which consumers and businesses have better and more equitable access to financial services. Our CEO, Theodora Hadjimichael, will be one of the guests for this podcast series - so keep a look out for that episode. To kick off the new series, Pål Vik spoke with Karl Dayson from the University of Lincoln, about why banks should seek to promote financial inclusion. Listen to this episode here: https://lnkd.in/eMxXDwGb #FinancialInclusion #ResponsibleFinance

The Responsible Finance and NatWest Group Capacity Building Programme for Community Development Finance Institutions (CDFIs) focused on strengthening the role of CDFIs in delivering accessible financial services to underserved communities. One key goal of this partnership was to help CDFIs scale up their operations, allowing them to offer more loans to underserved communities and small businesses. Adage Credit was one of the CDFIs to receive support and successfully completed a digital transformation project. "We are incredibly grateful for the support of the NatWest Development Grant, which has been instrumental in making this vision a reality." The funding from NatWest Group has enhanced their ability to serve customers, particularly those within underserved Black, Asian and Other Minority Ethnic communities who often face challenges accessing mainstream financial services. 🙌 Key Achievements: ⭐ 24/7 Online Application Portal: Adage Credit implemented a fully functional, round-the-clock online application portal, allowing customers to apply for loans at their convenience. ⭐ Enhanced Customer Access Portal: The customer access portal offers a comprehensive overview of loan accounts, enabling customers to easily manage their finances. ⭐ Streamlined Application Process: Adage redesigned their application process to be more efficient and user-friendly, reducing application times and improving the overall customer experience. ⭐ Open Banking Integration: The integration of Open Banking technology has significantly streamlined the credit assessment process. This has reduced administrative burdens, improved efficiency, and enabled Adage to offer faster loan decisions. ⭐ Scalable Platform: The new platform is designed to handle increased loan volumes, ensuring Adage can meet the growing demand for services. Read more 👇👇 https://lnkd.in/eacqkWqn #CDFIs #ResponsibleFinance #DigitalTransformation