Last Wednesday, the Government launched its long awaited financial inclusion strategy. I welcome its publication and there is much to be
positive about.
Financial inclusion has been a key policy area for me since I entered the House of Lords, not least as part of a special
Select Committee considering financial exclusion which I was privileged to serve on from 2016-2017, with
follow up report in 2021.
I have also had opportunities to influence and amend legislation to the benefit of this critical policy area. Over the past decade, as financial services legislation has progressed through Parliament, colleagues and I repeatedly highlighted the case for
a
financial inclusion objective for the Financial Conduct Authority and a duty of care for financial institutions.
In the 2021 Financial Services Act, I was able to pass an amendment which enabled
cashback without the need for a purchase. Research following this change has indicated not only a significant use of the service, but also that a large number of ‘cashbacks’ have been for £20 or lower, clearly delivering to a previously unmet aspect of
financial inclusion.
Latterly, via a series of parliamentary questions put to various Treasury Ministers, I have pushed the issue of accessibility of card and payment machines. In other words, those previously accessible payment points, made unacceptably inaccessible through
the non-inclusive introduction of their flat screen versions.
To this point, the strategy does set out support for "a new accessible cards initiative which will improve the consistency of accessible card features for blind and partially sighted people".
This is good news although there is much to do to make this a reality. It is particularly galling given that it is retrofitting accessibility following so-called progress. Put another way, having to commit resources to making something accessible that was previously
accessible and made not so, because changes were not considered through an inclusive design approach.
The Government’s strategy rightly states "inclusive design from the outset helps to prevent unintended consequences for consumers". The roll out of inaccessible card payment machines may well have been unintended, but it does not alter the reality currently
faced by millions who are now unable to pay independently which, prior to the change, was not the case. Unacceptable. An industry-led Inclusive Design Working Group will examine where financial products and services can be made more accessible. It is good
to see the work of Kris Foster and the team at Project Nemo highlighted in the fifty-two page report.
Colleagues and I have regularly questioned Government Ministers on their approach to financial education, such a critical element of enablement and empowerment. The strategy commits to making it compulsory from primary up to age 16 in England, expanding money
guidance and allocating dormant asset funding. Fair4All Finance will commit an initial £15 million to financial education and capability initiatives with the option to scale its initiatives with further funding once they are established. This is promising
and certainly could deliver those real life skills so urgently needed.
As ever though, much more detail is required on how this will be brought to life in an accessible and inclusive manner. Take for example those with dyslexia or dyscalculia - everyone must be included and enabled through this. It would be fair to say that
currently children with special education needs or a disability (SEND} are far too often not receiving the support and education to which they are entitled. The proposed approaches around financial education must measure up for everyone in our schools.
The Government has also committed to open 350 banking hubs by the end of this parliament, a new "digital pass" to "give people a free and easy way to prove who they are" and various efforts to promote savings, insurance, affordable credit (including through
the use of open banking) and tackling problem debt. I also look forward to more detail on these.
Perhaps the greatest gap is an absence of proper consideration of the role of fintech for financial inclusion. There are some mentions (such as open banking and affordable credit) but considering what fintech has already achieved, often against the odds
and prevailing policy approach, and more importantly, what we will all need it to deliver; I would suggest the strategy falls short. Fintech, often innovating out of necessity, has demonstrated what is possible, thus enabling not just financial inclusion via
its own efforts but, across the whole of financial services as they cotton on, as we’ve seen through improvements in our banking apps. This strategy tends to speak to ‘finance as it as and has been’ rather than 'finance as it will be and (in several important
ways) already is.’
Sibstar, is just one example of a fintech making such a difference. They are already well established and helping thousands of families where someone with dementia, a learning disability or mental health condition, can spend safely while maintaining their
independence. Co-creation clearly appears to be at the core of the approach, simple, effective, sadly all too often not central to the design process. Inclusive design, from the outset, with, not just for, boosts the likelihood of successful, sustainable products
and services. Products and services that meet those needs.
I guess this can be summarised as, where is fintech for financial inclusion in the financial inclusion strategy? The tone of the strategy is generally positive and focused. I have noted, however, that the key metrics set out at the end of the strategy do
not cover many of the important matters raised in its pages and are far from comprehensive.
An effective financial inclusion strategy has the potential to make a real difference to millions. Financial inclusion has blighted lives, held individuals, communities, and our country back for decades. To change this, to transform our economy for us all,
it must include us all - as citizens, consumers, innovators, investors, trad, and ‘newfi’. In short, an unflinching focus on a cross-economy, cross-society mission is vital for financial inclusion.