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Beware the left behind

If the vulnerable are left behind, politicians will have failed

By Chris Pond  

The Dormant Assets Scheme will direct funding from dormant assets—accounts untouched for 15 years—to financial inclusion initiatives. Photo: AP/SHUTTERSTOCK, ANDRIY POPOV/ALAMY STOCK PHOTO

Since its establishment in 2014, the Financial Inclusion Commission has campaigned tirelessly for the government to adopt a more formal financial inclusion agenda. Last year’s appointment of a Minister for Financial Inclusion at the Department for Work and Pensions signified a major success in ensuring that the government makes inclusion a core part of its wider consumer finance priorities.

The government’s response to the House of Lords’ Financial Exclusion Select Committee report set out clear priorities to provide access to financial services for all. However, financial inclusion has challenged policy-makers since the early 1990s, so I have always been wary of seeing any one measure or policy as a panacea.

Substantial progress has been made. The Department for Digital, Culture, Media and Sport’s Dormant Assets Scheme will direct funding from dormant assets to financial inclusion initiatives. As part of this, the government is working with the banking, securities, pensions, insurance, wealth management and investment sectors to increase the amount of dormant funds that can be released for good causes. (Dormant funds are those in bank or building society accounts untouched for 15 years.)

The Financial Conduct Authority (FCA) recently published the findings of its review into vulnerable consumers and consulted on recommendations designed to protect customers who find it difficult to get loans. The FCA’s immediate interventions suggest that this review can serve as a precedent for the regulator to enforce market changes in areas identified as not adequately protecting the most vulnerable consumers. Other areas in which the FCA has mooted further action include the tighter regulation of unarranged bank overdrafts.

The first meeting of the Financial Inclusion Policy Forum in March of this year was another positive step. Bringing together sector specialists and co-chaired by John Glen MP (see p6) and Guy Opperman MP (DWP Minister for Pensions and Financial Inclusion), the forum provides a vehicle for cross-governmental change, with industry input at its heart.

Initial discussions have centred on the success of basic bank accounts so far, on the importance of digital solutions in tackling financial exclusion and the role that financial capability plays. As we move forward, we are looking at how to ensure the forum becomes not just a talking shop, but something truly influential.

“The opportunity for consumer benefits is enormous, but the potential for others to be left behind is significant”

All of these interventions are welcome, but with technology about to reshape the financial services market, a sustained commitment to financial inclusion will be required. The advent of Open Banking brings this into sharp focus. The opportunity for consumer benefits is enormous, but the potential for others to beleft behind is just as significant.

Over the challenging years ahead, government and industry must be careful to ensure that the most vulnerable are not left still further behind and that we build an economy that truly works for all. Access to financial services is as important in ensuring well-being as access to basic utilities. This must be the over-arching focus of the Financial Inclusion Policy Forum in the coming months, starting with the next meeting in the autumn.

Over the next 12 months, industry and government must look at converting this year’s momentum into further action, ensuring that the financial inclusion agenda underpins finance policy and is never again an afterthought. Making room for financial inclusion means considering the societal impact of new innovation, up-skilling financial capability and building a more resilient economy. It is only through considering these concepts in harmony that we can build a truly inclusive economy.


Read more from our financial inclusion supplement

Banking on Change is a publication which examines how we can develop a comprehensive policy approach towards financial inclusion. The report features contributions from the likes of John Glen MP, Peter Dowd MP, Anne Pieckielon, Chris Pond and Guy Opperman MP.

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