The current cost of living crisis is well documented, with around 2.5 million renters already behind or struggling to pay their rent and 15.3 million people, or 29% of the population, having already had to use credit to pay for essentials.

The Financial Inclusion Commission were extremely disappointed to see that the ‘mini-budget’ announced on 23 September 2022 was not only severely lacking in measures to tackle barriers to financial inclusion, but is in fact likely to contribute to increased financial exclusion in the UK.

The Commission urge the Government to implement measures to address spiralling financial exclusion without delay, including measures such as the uplift of benefits in line with inflation which will help households who most need it now.

Furthermore, there cannot be inclusive growth in the UK unless the Government introduce a ‘must have regard’ to financial inclusion for the FCA to ensure financial services and products are designed inclusively.

The Financial Inclusion Commission was delighted to host its first Financial Inclusion Virtual Summit on 15^th February 2022. Joined by 145 guests across the financial services, government, not-for-profit and academic sectors, the Conference heard from speakers, such as Rt Hon John Glen MP, Lord Holmes of Richmond, and Sir Hector Sants.

In a video address, John Glen MP, Economic Secretary to HM Treasury reiterated his commitment to a financially inclusive United Kingdom, noting “financial inclusion and how we maximise access to financial products” as one of his highest ministerial priorities. The Minister also noted his view that financial inclusion is “integral” to the Government’s Levelling Up agenda. Sir Hector Sants, Chair of the Money and Pensions Service, echoed these comments on the importance of financial inclusion, while highlighting the impact of the COVID-19 pandemic on personal finances and outlining MaPS National Strategy for Financial Well-being. 

Attendees were also able to hear from and question Theodora Hadjimichael, CEO of Responsible Finance and Eric Leenders, Director of Personal Finance at UK Finance on the topic of the UK’s Financial Inclusion Road to Recovery following COVID-19. In the Q&A session, vital topics, such as, connectivity between service providers were raised. 

The Commission wishes to thank all our Conference speakers and guests for their contributions to the Conference and is looking forward to welcoming guests again to its follow-up events over the coming weeks.

The Commission has submitted its response to the Work and Pensions Select Committee’s inquiry into ‘Protecting Pension Savers: Saving for Later Life’. The Commission exposes, for the first time, the wide disparities in the financial position different groups of people will find themselves in when they reach retirement. Most people expect the same – positive – outcome from very different inputs. Many will be disappointed. At the crux of the issue: many peoples’ expectations of their post-retirement lifestyle are rising, while their likely outcomes are falling. 

Whilst we believe that the age limits and minimum earnings levels for automatic enrolment should be reduced, as they deprive many low paid employees of an employer’s contribution, we think it unlikely that an increase in total ‘automatic’ contributions, to bring likely outcomes in line with expectations, will be possible in the next 5 years. So, unless something is done to get people more connected, many are ‘sleepwalking’ into a much worse situation than they expect. It’s not just the new generation of people automatically enrolled. Many people who could get higher ‘employer matched’ contributions do not take them up – often giving up the chance to get £3 of value for £1 of contributions.

As part of our constructive and research-based response, the Commission suggested two solutions to this pensions time-bomb facing the UK. First, a major campaign effort is needed to change the nation’s retirement saving attitude, which remains largely as it was in the 20^th century. A properly costed and powerful campaign to create a lightbulb ‘moment’ aimed at the 30 million Britons in work, will help those currently sleepwalking into tough financial situations in later life to understand where they stand and what can be done to improve their likely retirement outcomes. Second, a fresh review, similar to that carried out to such effect by the Pensions Commission, is needed to achieve a consensus on the situation. The last comprehensive analysis from the Pensions Commission is quickly reaching 20 years old. A new review is recommended to prevent the nationwide sliding – incomprehensively – into inadequate pension saving.

The Commission welcomes any opportunities to work and collaborate further on the subject with the Committee and other stakeholders.

You can find our full response here.