ABCUL comments on financial inclusion publications in FinCap Week
17 Nov 17
Firstly, the Government response to the House of Lords Financial Exclusion Committee report and, secondly, a Financial Inclusion Commission report on improving access to household insurance products.
ABCUL Head of Policy, Matt Bland, commenting on the publications and marking FinCap Week, said: “This week is Financial Capability Week and which ABCUL has been actively promoting via social media as credit unions have an important role to play in advancing financial capability and inclusion through interventions like the powerful Save As You Borrow model.
“We were delighted when the House of Lords Financial Exclusion Committee report, published earlier in 2017, highlighted the ways in which Government might reform legislation in order to allow credit unions to play a broader role in alleviating financial exclusion. This responded to our evidence that recent interpretations of the Credit Unions Act by the regulatory authorities threatened to curtail the potential for credit unions to innovate and develop new services for the benefit of the excluded.
“It was great to see, therefore, that the Government remains committed to exploring the case for legislative reform in support of credit union innovation in their response to the House of Lords report published last week. Since the HM Treasury Call for Evidence on credit unions in 2014, there has been a commitment to review credit union legislation and we are working with HM Treasury officials to put forward evidence of how the credit union sector could play a broader role in financial inclusion with certain key reforms to the Act.
“One area where there is great potential was highlighted by a report by the Financial Inclusion Commission on access to household insurance published this week. The report highlights the possibilities around credit unions enhancing levels of household insurance among low income communities given their access to these demographics through their other services. However, it also notes that restrictive interpretations of the Credit Unions Act threaten to prevent credit unions from acting as an intermediary for introducing their members to reputable and affordable sources of household and other general insurance.
“The report is damning in relation to the scale of the problem with 16 million households having no household insurance and little savings to protect them should the worst happen. There are a number of complex factors which contribute to this problem which the report explores in detail. Were credit unions able to promote insurance products to their members, while not a solution in itself, it would be a positive contribution to tackling the underinsurance epidemic.
“We are encouraged by recent engagement with the Financial Conduct Authority on this issue which has a statutory duty to encourage competition and choice for the benefit of consumers and look forward to working with both they and HM Treasury to broaden credit unions’ role in this important field.”