Financial Inclusion Challenges in the UK Require Sustained Effort from Industry and Government
The current cost of living crisis has brought financial inclusion challenges to the forefront in the United Kingdom. With 17.5 million financially vulnerable individuals facing significant barriers to accessing affordable and appropriate products, it is essential that industry and government work together to address these pressing issues.
The Challenges Faced by Low-Income Individuals
Fair 4 All Finance has highlighted the difficulties faced by those on low incomes, who are often hit hardest by rising inflation. Research commissioned by Fair by Design has also underscored the additional challenges faced by this demographic. These individuals face significant barriers to financial inclusion, including:
- Difficulty accessing affordable and appropriate products
- Limited financial knowledge and literacy
- Limited access to credit and financial services
The Role of Industry in Promoting Financial Inclusion
The insurance and long-term savings industry has a critical role to play in promoting financial inclusion. However, rather than simply touting past successes, it is time for practical action.
New Financial Inclusion Strategy
In response to the challenges faced by financially vulnerable individuals, the industry has published a new Financial Inclusion Strategy. The strategy aims to:
- Formalize existing efforts
- Inform public policy discussions
- Focus industry-wide activity on three key areas:
- Affordability of motor insurance
- Impact of ill health on financial security
- Pensions advice gap
The strategy commits to:
- Understanding the issues facing financially vulnerable individuals
- Convening relevant stakeholders
- Working with government and regulators
- Amplifying the impact of existing initiatives and resources from organizations such as Plain Numbers, Fairer Finance, Fair 4 All Finance, and FLIC
The Need for Sustained Effort and Collaboration
Industry has previously demonstrated its ability to work together to tackle financial inclusion challenges. However, this requires sustained effort and collaboration between industry, government, regulators, and consumer groups. Only through a concerted approach can we drive practical and effective change that broadens financial inclusion across society.
Conclusion
Financial inclusion is a pressing issue in the UK, with 17.5 million financially vulnerable individuals facing significant barriers to accessing affordable and appropriate products. The insurance and long-term savings industry has a critical role to play in promoting financial inclusion, but this requires sustained effort and collaboration between industry, government, regulators, and consumer groups.