‘A chance to transform lives’: Government urged to prioritise financial inclusion in £880m Dormant Assets distribution

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Dormant Assets funding to be released by Government must continue to prioritise supporting people in financially vulnerable circumstances, urges Fair4All Finance.

The not-for-profit organisation, which works closely with the financial services and financial inclusion sectors, highlights the need for Government to use dormant assets to prioritise financial inclusion so that everyone(not just the well-off)can withstand life events, financial shocks and unpredictable incomes. The call comes as the Government opens a consultation on how the next £880m of dormant assets should be deployed.

‘Financial exclusion is an economic, health and social emergency’ said Sacha Romanovitch OBE, CEO of Fair4All Finance. ‘Some 14 million people – often families in the most deprived communities in the UK – are unable to access fair and affordable financial products and services to help them manage life’s ups and downs. With the first tranche of Dormant Assets funding and through collaboration with others, we have started to make significant impact to improve people’s lives– this work must continue.’

Examples of the progress made so far includes:

  • Increasing affordable credit provision by a third through funding community finance providers in some of the most deprived parts of the country, so that more people can borrow at affordable interest rates and avoid ‘loan sharks’
  • Preserving 50% of lending capacity targeted at people in vulnerable circumstances during the pandemic through a £3.9m Covid-19 Resilience Fund
  • Piloting a new no interest loan scheme (NILS) to help people spread the cost of emergency expenses and rebuild their credit record

‘This work makes real changes to people’s lives’ said Romanovitch. ‘Our Dormant Assets funding has already provided people across the country with a stepping stone to financial resilience, improved their physical and mental health and enabled them to play a full part in their communities.’

‘Long term change requires long term funding that is additional to government spending. We welcome the recognition of this in the consultation and the Government’s wish to continue focusing Dormant Assets funding on driving systems wide change.’

‘Extra funding would enable us to continue making progress on significantly increasing access to affordable credit and piloting and scaling new financially inclusive solutions such as consolidation loans, fair and affordable insurance, and solutions to address appliance poverty.’

Caroline Siarkiewicz, Chief Executive Officer at the Money and Pensions Service, said: ‘Financial wellbeing is as important as ever, as people hit hardest by the pandemic are now facing further financial pressures with increased costs of living, and access to appropriate products and services for all is an important part of that picture. 

‘Long term funding for financial inclusion will benefit the most vulnerable in society and those financially at risk.’

Martin Coppack, Director at Fair ByDesign, said: ‘We’ve seen the positive impact Dormant Assets funding can have on people in financially vulnerable circumstances through our work with Fair4All Finance piloting a No Interest Loan Scheme.

‘As the cost-of-living squeeze continues, financial exclusion is an ongoing and growing problem. Too many people are still having to pay a poverty premium when accessing financial services.

 ‘It’s vital that further long term funding is directed towards financial inclusion to ensure everyone has access to the essential products and services they need at a price they can afford.’