Social Finance
Financial Inclusion

Too many of the UK’s poorest are missing out on the benefits of banking

Financial Inclusion

Financial exclusion disproportionately affects the poorest in our society

Many people on low incomes are unable, reluctant or struggle to access appropriate ‘mainstream’ financial services including banking, savings, affordable credit and insurance by low-income customers. It is a key component of broader social exclusion.

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A new approach to banking: extending the use of jam jar accounts in the UK

Impact

East Lancs Moneyline/ Moneyline Cymru

Social Finance raised £640,000 which helped East Lancs Moneyline open five new offices to help tackle financial exclusion in South East Wales.

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The Challenge

East Lancs Moneyline (ELM) is a Community Development Finance Institution that provides affordable unsecured personal loans to individuals that are excluded from mainstream credit facilities and who would otherwise be forced to use high cost credit (e.g. home collected credit or pay day loans).


The Opportunity

Social Finance worked with ELM in 2009/10 to structure and market a bond to raise £640,000 loan capital so that they could open five new Moneyline offices in south Wales (Moneyline Cymru).


The Impact

Since the establishment of the first offices in Wales over two years ago, Moneyline Cymru has approved 7,500 affordable micro loans to borrowers who would have either been charged exorbitant rates or who have had to go to illegal money lenders. Almost 100% of Moneyline Cymru’s new customers in 2011 opened such a savings account.

Moneyline calculates that it has saved its customers in disadvantaged and vulnerable communities at least £2 million so far during two years of existence in South East Wales.


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Impact

Jam Jar Accounts

Banking services play a key role in enabling people to find work, budget securely and pay for goods and services.

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The Challenge

Nearly 9 million UK consumers are not currently benefiting from the ‘free’ bank accounts currently offered by our high street banks. These consumers either choose to manage in cash to avoid high fees for missed bill payments or overdrafts, or are incurring such penalty fees to the tune of of over £100 each year.


The Intervention

Social Finance worked with HM Treasury in 2011 to assess and develop commercially viable business models for supported budgeting accounts (aka ‘Jam Jar Accounts’) for consumers that are not benefiting from the current banking system that would support them to meet their regular bill commitments.


The Opportunity

We reported our findings to the Financial Inclusion Task Force in April 2011. We continue to consider proposals to pilot our basic bank account model with Government departments and financial providers.

Jam Jar accounts could improve the financial well-being of more than 9 million people in the UK

 


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info@socialfinance.org.uk

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Social Finance is authorised and regulated by the Financial Conduct Authority. FCA No: 497568