The Rt Hon Rishi Sunak MP
Chancellor of the Exchequer
1 Horse Guards Road
Westminster
SW1A 2HQ
17th March 2020
Dear Mr Rishi Sunak,
The government must step up its support for individuals with targeted emergency loan and grant funding delivered through responsible finance providers
The responsible finance industry asks the government to act now to ensure that individuals and families are able to access emergency affordable loan and grant funding to maintain financial stability amidst the coronavirus pandemic.
With businesses closing across the country and statutory sick pay being significantly lower than the average UK weekly wage, many are facing an indefinite period with substantially reduced income. At the same time, millions of UK adults have little or no savings, and the FCA has identified that 50% of UK consumers show one or more characteristics of potential vulnerability. This will leave them struggling to buy essentials and pay bills, and many people may resort to borrowing from high cost lenders to make ends meet, which would further exacerbate their financial distress.
We welcome the measures of support announced in last week’s Budget, however given the likely duration of the disruption caused by the coronavirus, we believe it is necessary for the government to step this up. Responsible finance providers – otherwise known as Community Development Finance Institutions –provide affordable loans to individuals and households not supported by mainstream finance providers. They already have the infrastructure in place to channel government funding quickly and with good value for money to the individuals and families who need it most, and have national reach through their online presence. In addition, a number of them have recently gone through a comprehensive due diligence process as part of the Fair4All Finance programme.
At the same time, lenders including responsible finance providers are likely to see a significant increase in loan defaults. Whilst the sector is exercising forbearance, in these exceptional times a Government rescue package must include a guarantee allocation for these lenders – which provide a vital service to financially vulnerable individuals across the UK – to help them to mitigate the risk of this.
As Chancellor, you are in the position to make sure individuals and families do not face increased financial distress during this period of economic and social instability. The responsible finance sector is ready to provide the government with the tools to do so.