• 10-15% of the adult population without access to bank accounts
• 7-10 million with limited access to financial services
• 12 million people use sub prime market in the UK
• Sub prime market estimated value of £16 billion/year
• 3-5m using doorstep lenders• 1m+ using pay day lenders
According to the FSA, Government and Financial Inclusion Taskforce
• Lack of personal lending to disadvantaged groups
• People face difficulty in raising finance to start or develop micro businesses
• People and businesses living in underprivileged areas suffer more the exclusion
• Debt problems affect a lot of poor people causing a spiral effect on their lives
• The lack of financial literature programmes create a real barrier limiting ability in managing personal finance
Effects of financial exclusion in London
Service Cost to client
Money and Debt Advice Free
Access to bank accounts Free
Microcredit Business Loans 19-12%
Personal Loans 35-28% + 5%admin
Our Business
2005/06- 2008/9
Total number of clients seen and supported 5000
Personal Loans Made (1200) £1,100,000
Microcredit Loans Made (130)£500,000
Bad Debt Rate 7%
Debt Advice Given 1500
Overindebtedness managed£12m
Bank Accounts opened 120
Savings for clients £450,000
Statistics
2008 - 2009FINANCIAL
CRISISNew categories of financially excluded
Households
Working class / self employed people
Small businesses
In UK 143 properties have been repossessed per day in 2008; they will become 205 a day in 2009
More people is borrowing from Payday Lenders charging up to 1600%
The lack of access to finance has generated cash flow crisis to many small businesses
Challenges of the new economic climate
New categories of financially excluded
New products/services needs
New delivery methods
HouseholdsQuick and professional
advice on remortgaging and debt problems
- Telephone advice- Preventative financial
capability programmes
Working class / self employed people
Consolidate high interest loans
- Telephone interviews (for repeated customers)
- Stricter connection with debt advice
Small businesses
Bigger and cash oriented loans for new category of
financially excluded businesses
- Referral partnerships with BSP
- Strong attention on repayment affordability
Products/services adaptation
More attention to exploited people Consolidation of unfair and usurious loans All 32 London Boroughs
Same services as before
Telephone advice services Financially themed workshops Assistance with applications to charitable funds/grants
Loans up to £10,000 (£20,000 after 1st year) Strengthen relationships with business advisors Focus assessment on current financial circumstances Step disbursement loans All 32 London Boroughs
Lessons learnt
• FF as Social enterprise look for solution in difficult times
• Innovated new products and services• Consulted with stakeholders and clients
to understand changing needs• Tightened existing systems and made
more efficient• Couldn’t have done this change so
quickly if primarily govt supported
Riccardo Aguglia Riccardo Aguglia Microcredit ManagerMicrocredit Managerwww.fairfinance.org.ukwww.fairfinance.org.uk47 Ben Jonson Road, Stepney, London E1 4SA47 Ben Jonson Road, Stepney, London E1 4SA18 Ashwin Street, Dalston, E8 3DL18 Ashwin Street, Dalston, E8 3DLT: 0207 780 1777 F: 0207 780 1999T: 0207 780 1777 F: 0207 780 1999E: [email protected]: [email protected]