Responsible Finance is calling for measures to ensure that vulnerable people and low-income families are not pushed into financial hardship – and into the hands of exploitative lenders – as a result the coronavirus pandemic. The government’s unprecedented action to protect the incomes of millions of low-income families are welcome and the government must now ensure it gets the details of its schemes right to ensure everyone can quickly access the support they need.
More than 16 million adults in the UK have savings of less than £100, which puts them at significant risk to a drop in income. An increasingly important aspect of the government’s response will be assistance to build the financial resilience of individuals and families in order to prevent millions of people falling into poverty and incurring high levels of debt, leaving them facing a steeper hill to climb after the crisis.
Responsible finance providers help to prevent people from entering crisis by providing small value affordable loans and other budgeting support to vulnerable and low-income customers. For those who have been out of work since the start of the coronavirus outbreak, this support is now critical. Responsible finance providers have the digital infrastructure in place to quickly assess applications and deliver emergency funding to the people who need it most, across the whole of the UK. Last year they supported 35,000 individuals from low income households, saving them £7.5 million in interest payments.
As the voice of the responsible finance industry, we are calling for action to prevent lasting financial harm to vulnerable people and households, including those who have already lost their jobs or key contracts. These individuals face an uncertain and daunting financial future; they need the right support delivered by a fair and trusted source.
Our key recommendations:
- A flexible, targeted emergency fund delivered nationally through responsible finance providers, providing the following products to financially vulnerable people affected by the pandemic:
- No Interest Loans, by bringing forward the HM Treasury No Interest Loans Scheme (NILS) proposal;
- Grants to cover basic needs.
- A loan guarantee fund which covers losses from existing customers unable to make repayments due to loss of income during the coronavirus pandemic.