How to… build financial resilience among citizens

Despite London’s status as a hub of international finance, many of the capital’s citizens are struggling to access quality financial services.

A new report from the London Assembly, called Shortchanged: the Financial Health of Londoners, urges the capital’s mayor to take steps to tackle financial exclusion as Londoners struggle under the growing weight of declining wages and increased living costs.

Since the financial crisis, banks have pulled back from providing credit to less profitable people and businesses, with many becoming reliant on pay-day lenders. A lack of data is hampering efforts to fully understand the scale of the problem in the capital, and young people in particular are more exposed to economic uncertainty than previous generations and need education and advice to help them develop greater economic security, the report says.

It recommends a number of transformative ideas to support the financial resilience of Londoners.

It calls for an annual survey of London households on their activities and interactions with financial advice and provision, to help policymakers and the financial industry better understand London’s ‘underbanked’. It wants each borough to develop a financial inclusion strategy, and for local authorities to work more closely together to share information and good practice.

The report recommends a number of measures to help young people gain better financial education and be included in financial provision.

A young person’s banking charter, for example, could include the aim to ensure all young people between the ages of 16 and 18 in London have access to a bank account, and the report calls for the finance industry, schools and charities to work together to provide financial education to young people.

A number of recommendations around providing affordable credit are included. The introduction of a Money Advice Week for example, would promote affordable credit options and debt advice. The report suggests that the London Transport network be used to promote credit unions and that the Greater London Assembly’s microloan fund be targeted at small and medium-sized businesses in the capital’s poorest communities that are struggling to access affordable credit. Helping community banks and credit unions to work more closely together is also suggested as an approach to improve the financial health of Londoners.

The report also calls for a refreshed digital inclusion strategy and for the mayor to convene a summit to explore new innovations that can help build a more financially inclusive capital.

Caroline Russell, London Assembly member and chair of the economy committee said in the foreword to the report:

‘This report is just the starting point to what we hope will be a bigger conversation led by the mayor about financial inclusion, whether through challenging existing providers or enabling new and innovative partnerships; for example, between community banks and credit unions.

‘The mayor can play an important role in making London a city that gives people access to good quality, inclusive financial services, and the knowledge to support financial resilience in an increasingly unpredictable economy.’

• Read the report here.