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Building New Partnerships for Affordable Credit & Financial Inclusion

Explore the journey of creating impactful local partnerships to address financial exclusion and empower communities. Learn about the challenges, successes, and the need for collaboration in delivering affordable credit solutions.

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Building New Partnerships for Affordable Credit & Financial Inclusion

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  1. Brokering New Partnerships To DeliverAffordable Credit & Financial Inclusion – Investing in Prevention to Improve Life Chances 20 May 2016 Graeme Oram, Chief Executive

  2. Introduction • Jimmy – A Bit of a Case Study • Some Context • The Problem • New Models to Create A Step Change in Local Agendas

  3. Jimmy – A Case Study (2007) • Long-standing employability customer • Tooled up by every available course but no progress into work • Biggest barrier - £000s of doorstep and other high-cost credit • Debt had created an insurmountable array of issues • Local advice services weren’t helping • Five Lamps recognised a massive gap in the financial services marketplace …… and our capacity to integrate key elements of the service • One of our first borrowers – still a customer • Still in the low pay, no pay cycle • Small savings • Comes to us regularly with issues • He can still see the joins in local provision – he doesn’t have great customer experiences • He is still one step away from Brighthouse or Wonga or worse

  4. Jimmy – A Case Study (2007) • Thanks to Five Lamps’ engagement with Jimmy we are now a leading Responsible Finance provider • We’ve made over 80000 loans totalling over £30m since 2008 • We are a lender and not an advice service, and we don’t offer a savings product • We have full Financial Conduct Authority permissions and are fully regulated • We have invested heavily in our infrastructure and in securing capital for on-lending • We want to work in partnership with local authorities, housing providers, credit unions and the advice sector • We are committed to adding real value but local partnerships typically aren’t working – so in most cases we have to do our own thing

  5. Some Context • Over-Indebtedness ‘Indebted Lives - The Complexities of life in debt (Money Advice Service 2013) • Report ranked all 406 local authorities in UK – Hull (number 1 with 43.1% of the population over-indebted) and Richmond-on-Thames, 406th with 1.2% • In our region: • South Tyneside (39.4%) 7th Hartlepool (36.8%) 10th • Middlesbrough (36.3%) 14th Sunderland (35.9%) 17th • Gateshead (33.9%) 20th Newcastle (32.9%) 24th • County Durham (31.6%) 32nd Stockton-on-Tees (28.2%) 58th • North Tyneside (27.8%) 62nd Redcar & Cleveland (26.8%) 75th • Darlington (25.5%) 81st Northumberland (24.4%) 97th • Since that report - advice services reduced, credit unions closing and housing organisations reducing discretionary spend.

  6. The Problem • Who owns this issue? • Who is accountable for it? • Who provides the investment? • How do we get a shared understanding and shared values? • What is the vision that we can rally around?..... and which shakes off organisational boundaries (The Challenge to Professionals) • What are the priorities? • In Short – The Solution is Strong Partnerships …. With A Clear Agenda for Change and a Commitment to Action • It may be that creating strong partnerships to deliver affordable credit itself creates a gateway to wider financial inclusion. Credit is not the customers only need

  7. Affordable Credit

  8. Unaffordable Credit Unable to Access Mainstream Financial Services Financial Exclusion Accessible/ Available; Reliable; Flexible; Affordable; Social Heart; Instant; Treats Customers Fairly Shared understanding of market and market needs ‘Win Win’ Partnerships (maybe a brand) Capitalise lenders – Social Investment Bonds Create Infrastructure LA Lead? Commissioner Lead? Public Health? Accountable Local Leaders More than Financial Inclusion Partnerships Business-oriented Partnerships The case for investment…. then investing Research Social Impact Education Building new local models to address Financial Exclusion

  9. All we need is… • Strong leadership and accountability at local level • A positive policy framework… maybe the Life Chances Strategy • A commitment to resourcing community lenders as the catalyst for wider service change • Brokerage of new partnerships with new relationships, spanning public, private and social sectors • Greater and shared understanding of the market place with shared data sets and widespread publication of data • It must be everyone’s agenda

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