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Combating financial exclusion in rural areas

Combating financial exclusion in rural areas. Lindsey Kearton, Policy Manager. What is financial exclusion?. Inability, reluctance or difficulty of certain groups of consumers to access mainstream financial products & services A lack of knowledge and understanding of money issues

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Combating financial exclusion in rural areas

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  1. Combating financial exclusion in rural areas Lindsey Kearton, Policy Manager

  2. What is financial exclusion? • Inability, reluctance or difficulty of certain groups of consumers to access mainstream financial products & services • A lack of knowledge and understanding of money issues • Scale of financial exclusion -> financial inclusion • Common factor for most excluded = living on a low income

  3. Consumer finances in WalesCFW research • 8% of adults (approx 190,000) in Wales don’t have a bank account (13% social grade DE) • 47% of adults have at least one type of loan/credit arrangement in place (48% in Mid/West) • 12% of people with loans had used a doorstep lender (20% in Mid/West) • 49% don’t have any savings (45% in Mid/West) • 65% find language used to describe financial products difficult to understand (71% in Mid/West) • 28% have bought financial product without fully understanding what they’re buying (24% in Mid/West)

  4. Consequences of financial exclusion • No or limited use of bank a/cs • No direct debit discounts/unable to spread costs over time; • Inability to take advantage of internet deals; • Reliance on cheque-cashing facilities • Denied access to mainstream credit • Pay more to borrow/use of high cost lenders

  5. Consequences of financial exclusion contd... • Lack knowledge/understanding of money • purchase costly, inappropriate or unnecessary financial products • more prone to unmanageable debt & exploitation • Limits life choices & opportunities • Living in poverty, fuel poor or suffer from poor health

  6. What causes financial exclusion? • Physical access (esp. in rural areas) • Banks/building societies/Post Offices moving out of communties • Lack of free-to-use ATMs • Fewer local advice services • Suitability of products to people’s needs & circumstances • Institutional/technological barriers • Changing long-established behaviours

  7. What is being done to address financial exclusion? • Welsh Government’s Financial Inclusion Strategy, ‘Taking everyone into account’ (July 2009) • Improving financial capability • Financial education on curriculum in Wales • Financial literacy projects delivered by CABx • Money Advice Service • Access to affordable loans/savings • Credit unions (CU Action Plan/Credcer CU) • Moneyline Cymru (telephone service)

  8. What is being done to address financial exclusion? contd... • Other initiatives • Increase uptake of bank a/cs (BBAs; CUCA) • LINK ‘free-to-use’ ATM programme • Debt advice (role of MAS) • Income maximisation/benefit take-up • Insurance with-rent schemes • Wales Illegal Money Lending Unit

  9. Future challenges? • Impact of economic downturn/recession • Rise in cost of living (energy; petrol, food) • Redundancies/increasing unemployment (esp. young people) • Increasing demand for debt advice • Increasing demand for money advice • Increasing demand for affordable credit

  10. Future challenges? contd... • Changing UK Government policy • Mainstreaming FI policy (end of FIF) • Changes to Legal Aid provision • Welfare Reform Bill • Financial inclusion is cross-cutting issue • Managing spending cuts • Continuing to develop suitable products/services • Raising awareness of alternatives • Improving understanding of consumer behaviour

  11. Further information: Lindsey Kearton, Policy Manager Consumer Focus Wales Email: Lindsey.Kearton@consumerfocus.org.uk Website: www.consumerfocus.org.uk/wales

  12. Llais Defnyddwyr CymruConsumer Focus Wales t 02920 787100 Llawr Gwaelod Ground Floor f 02920 787101 Tŷ Portcullis Portcullis House contactwales@consumerfocus.org.uk 21 Heol Ddwyreiniol y Bont-faen 21 Cowbridge Road East www.consumerfocus.org/walesCaerdydd Cardiff CF11 9AD CF11 9AD

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