New research shows that in 2016 responsible finance providers:
- Supported the start-up and survival of over 10,000 small businesses and social enterprises
- Created and saved over 20,000 jobs
- Helped 37,000 people access affordable credit, and supported them to deposit £3m in savings accounts
The responsible finance industry is playing a vital role in supporting thousands of small businesses and lower-income consumers who feel left behind, according to new research published today by trade body Responsible Finance. By extending access to fair and affordable credit, in 2016, the responsible finance industry helped Britain’s businesses to create and save over 20,000 jobs and enabled 37,000 ‘just about managing’ households to build financial capability and resilience.
‘Responsible Finance: The industry in 2016’ sets out the latest performance of a thriving industry that promotes financial inclusion. The report highlights the challenges faced by small and medium-sized enterprises (SMEs) in accessing mainstream debt finance. Since 2011 and despite recent lower interest rates, banks have squeezed SME lending by 18%. So in 2016 the responsible finance sector stepped in to provide £103 million in credit to 9,600 small businesses. This contributed £0.43 billion to the economy.
Four in 10 people have less than £500 in savings. The responsible finance sector is committed to helping people on low incomes and without a savings buffer to access affordable credit and services such as savings accounts and money advice. Such support helps consumers avoid taking on unmanageable debt from high cost lenders, and empowers them to take control of their financial health. In 2016 responsible finance providers supported 37,000 people in this way, providing loans totaling £20 million.
Jennifer Tankard, CEO of Responsible Finance, commented:
“Our new research profiles an industry that is robust and sustainable, attracting more diverse investment and highly regulated giving confidence to borrowers, and smarter at getting funding out to where it is needed. The responsible finance industry is having a tangible impact on the real economy through its contribution to regenerating high streets, strengthening local supply chains, supporting the social enterprise sector and generating greater consumer surplus and savings.”
“In a post-Brexit economy, there is an opportunity for the UK to re-shape how finance is delivered and create an inclusive financial services system that works for all businesses and consumers. We are seeking the support of policymakers, regulators and financial institutions, so that the responsible finance industry can do even more to create long-lasting prosperity for the country.”
Alistair Grimes, Chair of Responsible Finance said
“In 2016 responsible finance organisations provided £242 million in affordable credit at a fair price to businesses and consumers. They can be very proud of the difference they are making to local communities and to those individuals who cannot get credit from mainstream providers.”
“The need for the finance they provide remains as strong as ever and the benefits of filling this financial gap can be seen every day across the UK. We are confident that responsible finance lenders will continue their valuable work over the coming years.”
The report argues that to continue and extend the provision of fair and affordable finance and to create an inclusive financial system, the responsible finance industry needs:
- Proportionate regulation that recognises financial inclusion as an objective alongside ensuring consumer benefit.
- A policy environment that identifies financial exclusion as a key barrier to consumer wellbeing and economic growth.
- Access to sustainable sources of funding
- Support to adopt innovative new technology to broaden reach and efficiency, transforming the way responsible finance is delivered.
‘Responsible Finance: The industry in 2016’ is available here
-  Bank of England, Bankstats (Monetary & Financial Statistics)
 Money Advice Service (2015), Press release: Four out of 10 adults are not in control of their finances – new strategy launched to improve UK’s financial capability