For those on a low or changing salary it can be difficult to put money away for the expensive items; a car to get to a new job, replacing the boiler or a whole list of items for a new baby. Banks won’t help, but high cost lenders will. From credit card companies and payday lenders, to catalogue companies and car finance providers, the value of high cost loans is 50 times higher than those from the responsible finance sector.
Too often, borrowing money has become a gateway to long-term debt, to vulnerability, to anxiety and poor emotional and mental health. We want to break that cycle. Affordable credit with fair terms and working practices offers a lifeline. By helping these organisations expand, we can help millions of people regain financial health, and thrive.
Just Finance Foundation works across the financial system, from the grassroots to leaders of UK banking. We are uniquely placed to connect the two. With a desire among mainstream banks to make investment available, we are seeking feasibility funds to determine how to unlock capital and provide responsible finance providers with the support they need to meet demand.
CAPABILITY & ACCESS
With growing inequality, low or no wage increases, and an increase in short or temporary contracts, household incomes are becoming more pressed and unpredictable. At the same time, the lure to spend is everywhere, when with cash going cashless, it feels like we’re not spending at all. In this perfect storm, financial distress is becoming a norm, and household borrowing is returning to pre-crash levels of 2008.
Financial capability - the attitudes, knowledge and skills to manage money - is essential if we are to prevent these money pressures becoming deep-rooted money hardships. Yet two thirds of people in the UK don’t plan for life events, and 45% don’t seek help with debts because they believe they can manage them.
By examining the needs and behaviour of different groups of customers at different stages in their lives, we design and test products and services, tools and resources, that help them take control. We cultivate the values that support wise decisions. We embed programmes such as Lifesavers or Cash Smart Credit Savvy within communities, working with schools, local service providers, businesses and employers, in order to maximise accessibility to vital resources, and ensure they are delivered through a trusted relationship.
We plan to expand this work this year, and the partnerships to work at scale.
Children today face one of the most challenging financial landscapes in a generation. Evidence shows children form their fundamental attitudes and behaviour around money as early as age 7, but there is no requirement of primary schools to teach children financial education.
Our vision is to see effective, high quality financial education for all children throughout their primary years. LifeSavers is our values based financial education programme for primary schools, helping children manage money wisely now and in the future. We provide training and resources for teachers, offer support for school savings clubs, and encourage parental and wider community engagement.
Lifesavers is currently delivered in over 100 schools with more on the way. We are working with the banking sector and encouraging government to help us move beyond pilot scale delivery to help all schools integrate these critical life skills.
LifeSavers gives children the building blocks of good financial health by understanding:
- Where money comes from
- How money makes us feel
- What we can use our money for
- How our money helps other people
- How we can look after our money
Early evaluation has shown LifeSavers delivers improvements in knowledge and changes in behaviour, and increases parents’ engagement in their children’s money management.
Financial inclusion is essential at both a local and national level, however as with other services, access to fair and affordable financial services can vary. Communities with higher levels of poverty and disadvantage can be most affected, with funds to expand or sustain services under pressure. Many mainstream services are no longer relevant for low income households and innovation is overdue. Low income customers face the highest costs, yet are the least equipped to pay.
Financial exclusion has become a major social problem, a symptom and cause of underemployment, poor health and homelessness. We lack strong local institutions to promote financial resilience, challenge the regulatory and policy context, and deal with the stigma of talking about money that causes individuals to lose confidence in getting on top of their finances.
Working in local communities we tested an approach to community mobilisation and volunteering, collaborating with local churches. It proved an effective way to reach people who would never have the confidence to seek help or know where to start, leading to increased membership of local credit unions, and an increase in the uptake of innovative new financial products.
Today we are growing this approach, strengthening our supporter base, with a greater commitment to tackle financial exclusion. We want to be more ambitious, working with key assets in communities to facilitate change. Our aim is to show how a small but focused local organisation can make financial inclusion a priority, increase the flow of responsible finance, reduce the populations at risk of financial distress, and foster the conditions for a fair financial system.
We are supporting four local organisations developing their work in communities across the Black Country, Liverpool, London (north of the Thames) and Tyne to Tweed, with a view to helping other communities tailor the model to their area.