It is easy to forget when we hear about signs of economic recovery that communities across the UK continue to suffer from the long-term impacts of the recession. Whilst there is substantial work taking place nationally and locally to support individuals and businesses, we need to keep the spotlight on those areas in danger of being left behind. This is especially true when it comes to access to financial services with poorer communities suffering most from bank withdrawal of branches and services.
The launch of the Community Investment Coalition’s (CIC) Community Banking Charter is an important step forward in ensuring that every adult, household and business has access to a basic package of fair and affordable financial tools to enable them to operate in their daily lives.
CDF is proud to be a partner of CIC and to support the charter. With 1.4 million Britons without a basic bank account, seven million using sources of high cost credit and 59 per cent of the UK’s poorest households with less than £5,000 in savings, financial exclusion remains a real issue within communities. Dependence on and isolation from mainstream banking services restricts communities’ abilities to grow and sustain themselves.
Research by the Money Advice Service found that 16 per cent of people are unable to identify the balance on a bank statement. This illustrates the need to raise the level of financial literacy within the general population, alongside the provision of basic financial tools, so that everyone is well-placed to make informed financial decisions.
One thing that is clear is that the mainstream high street banks are not the only answer to this problem. CDF strongly believes that alternative financial services providers – be they crowdfunders, credit unions or community development finance institutions – should be encouraged to support underserved communities.
This is where CDF comes in as we have a unique reach into hundreds of communities across England. The £80m Community First programme that we run on behalf of government enables communities to come together to identify their strengths, plan for their future and become more resilient. Through running this programme we know all too well about the obstacles facing communities across the UK.
However despite these obstacles, we have found plenty of examples of communities and organisations collaborating to tackle the root causes of financial exclusion. One such organisation is Harlesden Money Advice (HMA) in North West London, which received two £2,000 Community First grants. The money has been used to help with the running costs of their free and impartial debt advice service, run entirely by volunteers. The volunteer advisers help people in the local community who have found themselves in debt. After being given a broad range of support including regular meetings, assistance in contacting creditors, people have then been able to plan how to repay their debts in a manageable way.
Similarly, the Ebor Gardens Advice Centre (EGAC) in Leeds, which received just over £2,000 in 2012, launched a digital online service could CASHflow. Endorsed by the Money Advice Trust, CASHflow helps people who are in debt, by requiring them to complete (either online or written) an income and expenditure exercise. Depending on their final results, EGAC staff provides clients with debt and money management advice, empowering them to take responsibility for their own finances. The service has been instrumental in confronting the impacts debt can have on the mental health and finances of communities across the UK.
Ultimately, the launch of the Community Banking Charter is only the first step in the provision of basic financial services to every adult, household and business in the UK. However, if the proposals in the Community Banking Charter were implemented, there is no doubt that we would witness a radical improvement. CDF looks forward, along with our other coalition partners, to supporting CIC’s work in championing this fresh approach towards community banking.
Photo by Images George Rex